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# 6.3.PNG - Exercise 6-32 Basic Product Costing[LO 6-3 In...

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Unformatted text preview: Exercise 6-32 Basic Product Costing [LO 6-3) In December Sara's Sodas produced 3.8 million liters of the beverage. Manufacturing overhead was \$1,350.000 and the cost per liter was \$0.45. Labor costs were 20 percent of materials cost. Required: a. Calculate the materials cost for December. (Enter your answer in dollars not in millions.) \$ 300000 b. Calculate the labor cost for December. (Enter your answer in dollars not in millions.) \$ 60,000 Explanation: a. If the cost per liter is \$0.45 and 3.8 million titers were produced, the total manufacturing cost must have been \$1,?10,000 (= \$0.45 x 3.8 million). But total manufacturing cost is computed as: Manufacturing cost = Materials + Labor + Manufacturing ouemead \$1,710,000 = Materials + 0.20 x Materials + \$1.350.000 So, 1.20 X Materials = \$1,710,000 — \$1,350,000 = \$360,000 Materials 2 \$300,000 (2 \$350,000 :- 1.20) b. Labor = 0 20 x Materials = 0.20 x \$300000 = \$60,000 ...
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