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 $480,000, variable manufacturing overhead of $2.40 per machine-hour, and 64,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed:

Number of units in the job		10
Total machine-hours		80
Direct materials	$	1,000
Direct labor cost	$	2,000

The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $37.50

• $300.00

• $47.40

• $379.20

Answer 1

Predetermined overhead rate

= (Total Fixed manufacturing overhead cost / Total machine hours) + Variable manufacturing overhead

= ($480,000 / 64,000) + $2.40

= $9.90

Total product cost = Direct material + Direct labor + (Predetermined overhead rate X Machine hrs used)

= $1,000 + $2,000 + ($9.90 X 80)

= $3,792

Unit product cost = Total product cost / Number of units in the job

= $3,792 / 10

= $379.20

4th option