Question

Lueckenhoff Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours. The company has provided the following data concerning Job T498 which was recently completed:

Number of units in the job	40
Total direct labor-hours	80
Direct materials	$ 950
Direct labor cost	$ 2,720

The unit product cost for Job T498 is closest to:

Answer 1

 

 

Particulars	Amount
Direct materials	$ 950
Direct labor cost	$ 2,720
Variable manufacturing overhead ($2.40 x 80)	$192
Fixed manufacturing overhead cost ($7.10 x 80)	$568
Total cost	$4,430
Divide by: No. of units	80
Unit product cost for Job T498	$55.38

 

The unit product cost for Job T498 is closest to: $55.38 per unit

 

 

Working:                                 

 

Predetermined overhead rate = Total fixed manufacturing overhead cost / Total direct labor-hours

= $497,000 / 70,000 hours

 

= $7.10 per direct labor-hour