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
