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Sheddon Industries produces two products. The products' identified costs are as follows:Product A-Direct materials $20,000-Direct labor $12,000Product B-Direct materials $15,000-Direct labor $24,000The company's overhead costs of $108,000 are allocated based on direct labor cost. Assume 4,000 units of Product A and 5,000 units of Product B are produced. What is the cost per unit for product B?

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Answer:

The cost per unit for product B is: $22,72

Explanation:

Costs Product A:

Direct materials $20,000

Direct labor $12,000

Units: 4000

Costs Product B:

Direct materials $15,000

Direct labor $24,000

Units: 5000

Overhead Costs: $108000

To allocate overhead costs based on direct labor, we need to find the coefficient to distribute the cost.

Total direct labor= 12000+24000=36000

Coefficient product A: 12000/36000= 0,33

Coefficient product B: 24000/36000= 0,67

Overhead costs Product A: 0.33*108000=35640

Overhead costs Product B: 0,67*108000= 72360

Cost per unit product B: (Direct Material+Direct Labor+Overhead costs)/5000

Cost per unit product B= (15000+24000+72360)/5000

Cost per unit product B= $22,72

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