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 $413,400, variable manufacturing overhead of $280 per machine hour, and 53,000 machine hours. The company has provided the following data concerning Job A496 which was recently completed 10 Number of units in the job Total machine-hours Direct materials Direct labor cost 80 $ 820 $1,640 The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Unit Product Cost = $ 330.8

Explanation;  

Estimated Total Manufacturing Overhead Cost = Estimated Total Fixed Manufacturing Overhead Cost + ( Estimated Variable Overhead Cost Per Unit of the allocation base * Estimated Total amount of the allocation base)

= $ 413,400 + ($2.80 per machine hour * 53000 machine hour

= $ 413,400 + $ 148,400

= $ 561,800

Predetermined Overhead Rate = Estimated Total manufacturing overhead / Estimated Total amount of the allocation base

= $561,800 / 53,000 machine hours

= $10.6 per machine hour

Overhead applied to a particular job = Predetermined Overhead Rate * Amount of the allocation base incurred by the job = $ 10.60 per machine Hour * 80 Machine hour

= $ 848

Particulars	Amount
Direct Material	$ 820
Direct Labor	$ 1,640
Manufacturing Overhead applied	$ 848
Total Cost of Job A496	$ 3,308
Total Cost of Job A496	$ 3,308
Number of Units	10
Unit Product Cost	$ 330.8