At the beginning of the year, Rangle Company expected to incur $54,000 of overhead costs in producing 6,000 units of product. The direct material cost is $20 per unit of product. Direct labor cost is $30 per unit. During January, 600 units were produced. The total cost of the units made in January was:
A) $30,000
B) $5,400
C) $35,400
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

First, we need to determine the predetermined overhead rate:

Predetermined overhead rate = Estimated total overhead costs / Estimated total number of units of product

Predetermined overhead rate = $54,000 / 6,000 units = $9 per unit

To calculate the total cost of the units made in January, we need to add together the direct material cost, direct labor cost, and overhead cost:

Direct material cost = $20 per unit x 600 units = $12,000
Direct labor cost = $30 per unit x 600 units = $18,000
Overhead cost = $9 per unit x 600 units = $5,400

Total cost = Direct material cost + Direct labor cost + Overhead cost
Total cost = $12,000 + $18,000 + $5,400 = $35,400

Therefore, the answer is (C) $35,400.

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