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3 years ago

11

Wario Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. Th

e company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $217,500, variable manufacturing overhead of $3.90 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed: Number of units in the job 25 Total machine-hours 80 Direct materials $ 500 Direct labor cost $ 2,160 The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.) a. $142.08 b. $180.20 c. $129.60 d. $177.60

1 answer:

pantera1 [17]3 years ago

7 0

Answer:

Option (a) is correct.

Explanation:

Given that,

Total fixed manufacturing overhead cost = $217,500

Variable manufacturing overhead = $3.90 per machine-hour

Total machine hours = 30,000

Number of units in the job = 25

Total machine-hours = 80

Direct materials = $ 500

Direct labor cost = $ 2,160

Firstly, we need to find out the total manufacturing overhead.

Estimated total manufacturing overhead cost is the sum total of estimated fixed manufacturing overhead and the variable manufacturing overhead cost.

Estimated total manufacturing overhead cost:

= Total fixed manufacturing overhead cost + (Variable manufacturing overhead per machine hour × Number of machine hours)

= $217,500 + ($3.90 × 30,000)

= $217,500 + $117,000

= $334,500

Predetermined overhead rate:

= Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

= $334,500 ÷ 30,000 machine-hours

= $11.15 per machine-hour

Therefore, the overhead applied to this specific job is determined as follows:

= Predetermined overhead rate × Amount of the allocation base incurred by the job

= $11.15 per machine-hour × 80 machine hours

= $892

Unit product cost for Job A496:

= Total product cost ÷ Number of units in the job

The total product cost includes Direct materials, Direct labor cost and manufacturing overhead.

Total product cost:

= Direct materials + Direct labor cost + manufacturing overhead

= $500 + $2,160 + $892

= $3,552

Hence, the unit product cost is as follows:

= $3,552 ÷ 25

= $142.08

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