Question

Kostelnik Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $488,400, variable manufacturing overhead of $2.70 per machine-hour, and 74,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed: Number of units in the job 20 Total machine-hours 80 Direct materials $ 930 Direct labor cost $1,860 The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice

Answer 1

Answer:

Unitary cost= $176.7

Explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (488,400/74,000) + 2.7

Predetermined manufacturing overhead rate= $9.3

Now, we can determine the total cost for Job A496:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Total cost= 930 + 1,860 + (9.3*80)

Total cost= $3,534

Finally, the unitary cost:

Unitary cost= 3,534/20

Unitary cost= $176.7