Shepherd Company manufactures two types of shoes – sneakers and boots. Each sneaker requires 2 direct labor hours and boots require 1.5 direct labor hours. The overhead rate per direct labor hour is $2. Direct materials for sneakers and boots is $15 and $20, respectively. Direct labor for sneakers and boots is $5 and 7, respectively. The total unit cost for each product is:

 Shepherd Company manufactures two types of shoes – sneakers and boots. Each sneaker requires 2 direct labor hours and boots require 1.5 direct labor hours. The overhead rate per direct labor hour is $2. Direct materials for sneakers and boots is $15 and $20, respectively. Direct labor for sneakers and boots is $5 and 7, respectively. The total unit cost for each product is:
 
multiple choice

    Sneakers: $24; Boots: $30 Correct
    Sneakers: $30; Boots: $24
    Sneakers: $20; Boots: $27
    Sneakers: $23; Boots: $31

Explanation

Knowledge Check 01
 
Sneakers: Overhead = 2 × $2 = $4. Total cost = $15 + $5 + $4 = $24. 

Boots: Overhead = 1.5 × $2 = $3. Total cost = $20 + $7 + $3 = $30.