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Overhead Labor Cost/Units Produced

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Company A produces two products. The products' identified costs and production information are as follows:

Product A Product B
Direct Material $18,000 $12,000
Direct labor 6,000 12,000
Units produced 4,000 5,000

Overhead is $54,000

Assuming the company allocates overhead on the basis of labor cost, compute the overhead and total production cost for both products.

Assuming the company allocates overhead on the basis of units produced, compute the overhead and total production cost for both products.

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Solution Summary

This solution provides calculations for overhead and total production costs.

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Based on Labor Cost

Product A overhead = 6000/ (6000 + 12000) x 54,000 = 18,000

Total Product A cost = 18000 + 6000+18000 = ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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