Stackhouse Computing produces high performance desktop computers. Labor cost data shows that the company spent $1,036,000 for 3,700 computers produced, and each computer requires 2 technician hours and 5 hours of direct labor. Direct labor is paid $16 per hour by the company. What is the cost of 1 technician hour?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 2EB: Boarders estimates overhead will utilize 160,000 machine hours and cost $80,000. It takes 4 machine...
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Stackhouse Computing produces high performance desktop computers. Labor cost data shows that the company spent $1,036,000 for 3,700 computers produced, and each computer requires 2 technician hours and 5 hours of direct labor. Direct labor is paid $16 per hour by the company. What is the cost of 1 technician hour? 

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In the given case, the cost of 1 technician hour can be calculated by dividing the total cost of technician per computer by dividing technician hour required per computer. The total cost of a technician will be calculated by subtracting the direct labor cost per computer from the total labor cost per computer.

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