At the beginning of the year, Rangle Company expected to incur $58,000 of overhead costs in producing 5,800 units of product. The direct material cost is $24 per unit of product. Direct labor cost is $34 per unit. During January, 540 units were produced. The total cost of the units made in January was:
A) $31,320
B) $5,400
C) $36,720
D) None of the answers are correct.

Question

Quizplus · Accepted Answer

First, we need to calculate the predetermined overhead rate:

Predetermined overhead rate = Estimated overhead cost / Estimated units of product 
Predetermined overhead rate = $58,000 / 5,800 units 
Predetermined overhead rate = $10 per unit

Next, we can calculate the total cost per unit:

Total cost per unit = Direct material cost + Direct labor cost + Overhead cost 
Total cost per unit = $24 + $34 + $10 
Total cost per unit = $68

Finally, we can calculate the total cost of the units made in January:

Total cost of units made in January = Number of units produced x Total cost per unit 
Total cost of units made in January = 540 units x $68 
Total cost of units made in January = $36,720

Therefore, the correct answer is C.

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