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# Total product cost for ABC Company

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ABC Co produces three items: TV's, VCR's, and Stereos. They use a plant wide overhead rate based on machine hours. The following is available:

Product TV's VCR's Stereos
Units Produces 3000 2000 5000
Machine Hrs (assembly) 1 3 2
Machine Hours (packing) 1 1 1
Direct Labor hrs (per unit) 2 2 2
Direct Mat cost (per unit) \$5.00 \$45.00 \$15.00

Direct labor wage rate is flat \$20/hour with no overtime incurred. Also, total OH costs are \$380,000 for assembly and \$200,000 for packing. Calculate total product cost per stereo.

#### Solution Preview

Total product cost consists of Direct Material, Direct Labor and Overhead
Overhead is applied based on machine hours.
We first calculate the predetermined overhead rate
Predetermined overhead rate = Total ...

#### Solution Summary

The solution explains how to calculate the total product cost

\$2.19