Question

The C&C Candy Company uses machine hours to allocate manufacturing overhead. The company estimates $150,000 worth of manufacturing overhead and 3,000 machine hours. The batch ticket for Batch 127 reveals the following information:

3,000 oz of chocolate at 50 cents per ounce
400 hours of direct labor at $15 per hour
180 machine hours 82,500 candy bars produced Batch Completed July 16, 2019.

Determine the cost of one bar.

Answer 1

Answer:

$0.20

Explanation:

Predetermined overhead rate = Estimated manufacturing overhead / Machine hours = 150000/3000 = 50

Applied overhead = Machine hours worked * Predetermined overhead rate = 180 * $50 = 9000

Direct material                       $1,500 (3,000*0.50)

Direct labor                            $6,000 (400 hours*$15)    

Manufacturing overhead $9000

Total cost                                $16,500

Number of units = 82500 candy bars

So, the Unit cost = Total cost / Number of units = $16,500/82,500 units = 0.20

So, the cost of one bar is $0.20