Sheddon Industries Produces Two Products The Company's Overhead Costs of $108,000 Are Allocated Based on as Follows

question 69

Multiple Choice

Sheddon Industries produces two products. The products' identified costs are as follows: $$\begin{array} { | l | l | l | } \hline & \text { Product A } & \text { Product B } \\\hline \text { Direct materials } & \$ 20,000 & \$ 15,000 \\\hline \text { Direct labor } & 12,000 & 24,000 \\\hline\end{array}$$ The 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? (Do not round your intermediate calculations.)

• A) $7.80
• B) $22.20
• C) $16.80
• D) None of these answers is correct.

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Definitions:

Sales Journal

A specialized journal used to record all credit sales transactions of a business.

Cost Center

A department or unit within a business that does not directly generate profit but incurs costs, e.g., customer service or research departments.

Profit Center

A branch or division of a company that is directly responsible for generating its portion of the company's overall profit.

Profit Center

A branch or division of a company that is treated as a separate unit for the purpose of calculating its profitability.