Sample Question: Process Costing
Iceland Company uses JIT manufacturing; several manufacturing cells are set up within one of its factories. One of the cells makes space heaters; the cost of production for the month of March is as follows:
Cell labor $ 20,000
Direct materials 50,000
Overhead 40,000
Total $110,000
During the March, 10,000 space heaters were produced and sold.
1. Explain why process costing can be used for computing the cost of production for space heaters
2. Calculate the cost per unit for a space heater