Question

1. ) Best Lock Corporation is a manufacturer of locking mechanisms. Best uses a job order costing system to record their product costs. During the month of February, Nest worked on two jobs; Job A and Job B. Job A is an order for 5,000 steel locks while Job B is an order of 1,000 platinum locks. Manufacturing on Job A was on-going prior to the start of February and $35,000 of costs had already been incurred for the job. Job B was not initiated until after the start of February. Best uses direct labor-hours as their allocation base for applying overhead and their predetermined rate is $40 per direct labor-hour.

During February, $55,000 of materials were requisitioned for jobs; $15,000 for Job A and $40,000 for Job B. Labor costs incurred for manufacturing of Job A and Job B during the month of February was $35,000; $10,000 for Job A (1,000 direct labor-hours at $10 per hour) and $25,000 for Job B (2,500 direct labor-hours at $10 per hour).

Complete the following Job Cost Sheets as necessary:

Job A was finished prior to the end of February. Compute the product cost per unit for Job A.

Answer 1

The product cost per unit for Job A		$20
	Job A	Job B
Cost in January	$35,000	-
Materials	$15,000	$40,000
Labor	$10,000	$25,000
Overhead	$40,000	$100,000
Total	$100,000	$165,000
Units	5,000	1,000
Product cost per unit	$20	$165