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 $399,600, variable manufacturing overhead of $2.60 per machine-hour, and 54,000 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	$	730
Direct labor cost	$	1,460

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

Answer 1

Ans.	Unit Product Cost =   Total Product cost / Number of units
		2990 / 10
		299   per unit
	*Steps for the Calculation of Unit Product Cost:
	STEP 1 :   Predetermined Overhead Rate:
	Predetermined overhead rate   = Total manufacturing overhead / Total amount of allocation base
		(399600 + 140400) / 54000
		$10	per machine hour
	*Total manufacturing overhead = Fixed manuf. Overhead + Variable manuf. Overhead
	*Variable manufacturing overhead = variable manufacturing overhead per machine hour * machine hours
		2.60 * 54000
		140400
	STEP 2 : Overhead Applied:
	Overhead applied to job A496 = Predetermined overhead rate * Machine hours incurred
		10 * 80
		$800
	STEP 3 : Total Cost of Job A496:
		A496
	Direct materials	$730
	Direct labor	$1460
	Manufacturing overhead applied	$800
	Total product cost	$2990