Question

Lupo 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 the following data: Total machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour 32,300 $581,400 $ 2.00 Recently, Job T687 was completed with the following characteristics: 10 40 Number of units in the job Total machine-hours Direct materials Direct labor cost $ 630 $1,260 The unit product cost for Job T687 is closest to:

Answer 1

Predetermined overhead rate = Variable overhead cost per machine hour + Fixed manufacturing overhead cost/Estimated machine hours

= 2 + 581,400/32,300

= 2 + 18

= $20 per machine hour

Overhead applied = Actual machine hours used x  Predetermined overhead rate

= 40 x 20

= $800

Job cost sheet

Direct material	630
Direct labor	1,260
Overhead applied	800
Total manufacturing cost	$2,690

Unit product cost = Total manufacturing cost/Number of units

= 2,690/10

= $269

First option is correct.

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