Question

# The following manufacturing costs were incurred by the Walmart Company in 2019: Direct Materials \$112,500 Direct...

The following manufacturing costs were incurred by the Walmart Company in 2019:

 Direct Materials \$112,500 Direct Labor \$175,000 Manufacturing overhead \$235,000

These costs were incurred to produce 25,000 units of product. Variable manufacturing overhead was 80% of the direct materials cost.

In 2020, the direct material and variable overhead costs per unit will increase by 15%, but the direct labor costs per unit are not expected to change. Fixed manufacturing costs are expected to increase by 7.5%. The company is expecting to produce 20,000 units in 2020.

What is the product costs per unit for 2020?

#### Homework Answers

Answer #1

Solution :

Product Cost per Unit for 2020 is \$ 24.11 (rounded off).

Working :

Product Cost per Unit in 2020

 Particulars Working Per Unit Cost Direct Material \$ 4.50 * 1.15 \$ 5.175 Direct Labor \$ 7 Variable Manufacturing Overhead \$ 3.60 * 1.15 \$ 4.14 Fixed Manufacturing Cost (\$ 145,000 * 1.075) / 20,000 \$ 7.794 Cost per Unit 24.109

Working on Cost for year 2019

 Particulras Total per Unit Direct Material \$ 112,500 / 25,000 \$ 4.5 Direct Labor \$ 175,000 / 25,000 \$ 7 Variable Manufacturing Overhead (\$ 112,500 * 0.80) / 25,000 = \$ 90,000 / 25,000 \$ 3.6 Fixed Manufacturing Overhead (\$ 235,000 - \$ 90,000) / 25,000 = \$ 145,000 / 25,000 \$ 5.8

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