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 $422,100, variable manufacturing overhead of $2.60 per machine-hour, and 67,000 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 $ 800 Direct labor cost $1,600 The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice $240.00 $38.90 $30.00 $311.20

Answer 1

Step 1 :Calculation of 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)
• = $422,100 + ($2.60 per machine hour * 67,000 machine hour
• = $422,100 + $174,200
• = $ 596,300

Step 2 : Calculation of Predetermined Overhead Rate

• = Estimated Total manufacturing overhead / Estimated Total amount of the allocation base
• = $596,300 / 67,000 machine hours
• = $8.9 per machine hour

Step 3 Calculation of Overhead applied to a particular job

• = Predetermined Overhead Rate * Amount of the allocation base incurred by the job
• = $ 8.9 per machine Hour * 80 Machine hour
• = $712

Step 4 Calculation of unit product cost ( Final Answer)

Particulars	Amount
Direct Material	$ 800
Direct Labor	$ 1,600
Manufacturing Overhead applied	$ 712
Total Cost of Job A496	$ 3,112
Number of Units	10
Unit Product Cost	$ 311.20

Hence answer would be (D) $311.20