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 31,400
Total fixed manufacturing overhead cost $ 219,800
Variable manufacturing overhead per machine-hour $ 4
Recently, Job T687 was completed with the following characteristics:

Number of units in the job 10
Total machine-hours 20
Direct materials $ 580
Direct labor cost $ 1,160

The unit product cost for Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)


a.$196.00

b.$98.00

c.$80.00

d.$174.00

Answer 1

Option (a) is the correct answer to this question.

Explanation:

Complete overhead vector estimated=(4 * 31400)=$125600

Total overhead estimated= Total overhead variable estimated Total overhead fixed estimated

=$125600+219800=$345400

Normal overhead rate=$345400/31400=$11 per system hour.

Complete overhead applied=(11 * 20)=$220

Hence total job cost=Direct material+Direct labor+Total overhead

=(580+1160+220)

=$1960.

The final answer is $196.00

Answer 2

Unit Cost = $196

Step-by-step explanation:

As per the data given in the question,

Total variable overhead estimated = 4×31,400 = $125,600

Total overhead estimated = $125,600+$219,800 = $345,400

Predetermined overhead rate = $345,400÷31,400 = $11 per hour

Total overhead applied = $11×20 = $220

Hence, Total job cost = Direct material + Direct Labor + Total overhead

= $580 + $1,160 + $220

= $1,960

So, Unit cost = $1,960 ÷ 10 = $196