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A company produces batches of 1,500 units. Each batch requires 60 machine hours. The overhead is applied at a rate of $30 per machine hour. If the direct materials cost $3,000 and the direct labor costs $2,700 per batch, what is the total cost of the batch and the cost per unit?Question 17Answera.Total cost: $7,500, Cost per unit: $5b.Total cost: $7,200, Cost per unit: $4.80c.Total cost: $6,000, Cost per unit: $4d.Total cost: $6,500, Cost per unit: $4.33

Question

A company produces batches of 1,500 units. Each batch requires 60 machine hours. The overhead is applied at a rate of 30permachinehour.Ifthedirectmaterialscost30 per machine hour. If the direct materials cost 3,000 and the direct labor costs 2,700perbatch,whatisthetotalcostofthebatchandthecostperunit?Question17Answera.Totalcost:2,700 per batch, what is the total cost of the batch and the cost per unit?Question 17Answera.Total cost: 7,500, Cost per unit: 5b.Totalcost:5b.Total cost: 7,200, Cost per unit: 4.80c.Totalcost:4.80c.Total cost: 6,000, Cost per unit: 4d.Totalcost:4d.Total cost: 6,500, Cost per unit: $4.33

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Solution

First, let's calculate the overhead cost. The overhead is applied at a rate of 30permachinehourandeachbatchrequires60machinehours.So,theoverheadcostis3060=30 per machine hour and each batch requires 60 machine hours. So, the overhead cost is 30 * 60 = 1,800.

Next, we add the overhead cost to the direct materials cost and the direct labor cost to get the total cost of the batch. So, the total cost is 1,800 (overhead cost) + 3,000 (direct materials cost) + 2,700 (direct labor cost) = $7,500.

Finally, to find the cost per unit, we divide the total cost of the batch by the number of units in the batch. So, the cost per unit is 7,500 / 1,500 = $5.

So, the total cost of the batch is 7,500andthecostperunitis7,500 and the cost per unit is 5. Therefore, the answer is a. Total cost: 7,500,Costperunit:7,500, Cost per unit: 5.

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