Before the year began, McCrae, Inc. estimated its manufacturing overhead costs for the year to be...

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Answer 1

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Calculation total cost of order, unit cost under order and Gross profit reported on each unit in the order
Direct Materials	$1,000
Direct Labor	$1,500
Manufacturing overheads applied [29 machine hours * $30]	$870
Total Order Cost	$3,370
/ No.of units ordered	15
Unit cost	$225

Gross profit reported on each unit in the order = Sales price - Unit cost = $711 - $225 = $486
Gross profit reported on each unit in the order = $486

Working
Predetermined Overhead application rate = Estimated manufacturing overhead cost for the year/ Estimated machine hours for the year
Predetermined Overhead application rate = $300000 / 10000 machine hours = $30 per machine hour

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