Question

Dehner 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 the following data: Total direct labor-hours 67,000 Total fixed manufacturing overhead cost $ 227,800 Variable manufacturing overhead per direct labor-hour $ 6.00 Recently, Job P951 was completed with the following characteristics: Number of units in the job 25 Total direct labor-hours 100 Direct materials $ 660 Direct labor cost $ 6,700 The unit product cost for Job P951 is closest to:

$235.00

$332.00

$232.00

$83.00

Answer 1

B. $332.00

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)

Estimated total manufacturing overhead cost = $227,800 + ($6.00 per direct labor-hour × 67,000 direct labor-hours)

Estimated total manufacturing overhead cost = $227,800 + $402,000

Estimated total manufacturing overhead cost = $629,800

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

Predetermined overhead rate = $629,800 ÷ 67,000 direct labor-hours

Predetermined overhead rate = $9.40 per direct labor-hour

Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job

Overhead applied to a particular job = $9.40 per direct labor-hour × 100 direct labor-hours

Overhead applied to a particular job = $940

Total cost of Job P951 = Direct materials + Direct labor + Manufacturing overhead applied

Total cost of Job P951 = $660 + $6,700 + $940

Total cost of Job P951 = $8,300

Unit product cost = Total cost of Job P951 ÷ Number of units

Unit product cost = $8,300 ÷ 25

Unit product cost = $332.00