Assume Clean Motors Ltd manufactures only one component for the motor vehicle industry.In one year the company produced 25 000 units of the component of which 22 000 units were sold.The following costs were recorded for that year:
$ \begin{array}{lr}\text { Direct material } & \$ 750000 \ \text { Direct labour } & 450000 \ \text { Manufacturing overhead } & 300000 \ \text { Administrative expenses } & 84000\end{array} $
Calculate the inventoriable product cost per unit of output for Clean Motors Ltd.
A) $68.18
B) $48.00
C) $63.36
D) $60.00

Question

Quizplus · Accepted Answer

The inventoriable product cost includes direct materials, direct labor, and manufacturing overhead. Total inventoriable costs = $750,000 + $450,000 + $300,000 = $1,500,000. Divide by the total units produced (25,000) to get the cost per unit: $1,500,000 / 25,000 = $60.00.

Assume Clean Motors Ltd Manufactures Only One Component for the Motor