At the beginning of the year, Rangle Company expected to incur $63,000 of overhead costs in producing 6,300 units of product. The direct material cost is $29 per unit of product. Direct labor cost is $39 per unit. During January, 590 units were produced. The total cost of the units made in January was:
A) $40,120
B) $5,900
C) $46,020
D) None of the answers are correct.

Question

Quizplus · Accepted Answer

To calculate the total cost of the units made in January, we need to calculate the total production cost per unit and then multiply that by the number of units produced in January.

The total production cost per unit can be calculated as follows:

Direct material cost per unit + Direct labor cost per unit + Overhead cost per unit

Direct material cost per unit = $29 
Direct labor cost per unit = $39 
Overhead cost per unit = Total overhead cost for the year / Total number of units expected to be produced for the year

Total overhead cost for the year = $63,000 
Total number of units expected to be produced for the year = 6,300

Overhead cost per unit = $63,000 / 6,300 = $10

Total production cost per unit = $29 + $39 + $10 = $78

Now, to calculate the total cost of the units made in January, we can simply multiply the total production cost per unit by the number of units produced in January:

Total cost of units made in January = Total production cost per unit x Number of units produced in January 
Total cost of units made in January = $78 x 590 = $46,020

Therefore, the correct answer is C) $46,020.

At the Beginning of the Year, Rangle Company Expected to Incur