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Home Q & A Board Other Fields Homework Help Business Accounting
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H3Ko H3Ko
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7 years ago
Irene Manufacturing uses a predetermined overhead allocation rate based on a percentage of direct labor cost. At the beginning of the year, the company estimated total manufacturing overhead costs at $1,000,000 and total direct labor costs at $830,000. In June, Job 711 was completed. The details of Job 711 are shown below.

Direct materials cost   $27,000
Direct labor cost   $13,000
Direct labor hours   400 hours
Units of product produced   500 units

How much was the cost per unit of finished product? (Round any percentages to two decimal places and your final answer to the nearest cent.)
A) $80.00
B) $111.20
C) $101.58
D) $85.20
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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TanksTanks
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7 years ago
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H3Ko Author
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#2
7 years ago
I just realized you had posted this! Thanks so much
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#3
3 years ago
thank you
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#4
3 years ago
Thanks
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#5
3 years ago
thank you
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#6
3 years ago
Thank you for helping me better understand how to solve this problem.
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#7
3 years ago
thank you
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#8
3 years ago
Tk
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#9
3 years ago
thanks
Anonymous
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#10
9 months ago
Help! The answer is missing an explanation...
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#11
9 months ago
Quote from: Anonymous (9 months ago)
In June, Job 711 was completed. The details of Job 711 are shown below.

I found a similar question and its solution, and was able to deduce the answer to this one:




Ans: C) $253.57

Explanation:

Predetermined overhead rate = (Estimated total manufacturing overhead cost ÷ Estimated direct labor cost) × 100

= (1030000 ÷ 840000) × 100

= 122.62℅

Calculation of cost per unit of finished product:

Amount
Direct materials cost   24000
Direct labor cost   12000
Overhead cost   14714.4
Total cost (A)   $50714.4
Units of product produced (B)   200
Cost per unit of finished product (A÷B)   $253.57
Overhead cost = Direct labor cost × predetermined rate

= 12000 × 122.62℅

= $14714.4
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