Question

Thach 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 $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job T321 was completed with the following characteristics: The unit product cost for Job T321 is closest to:
a. $117.00
b. $58.50
c. $154.50
d. $51.50

Answer 1

Answer:

Option (C) is correct.

Explanation:

Total overheads:

= Variable overheads + Fixed overheads

= ($3 × 70,000) + $665,000

= $875,000

Hence,

Predetermined overhead rate:

= Total overheads ÷ machine-hours

= ($875000 ÷ 70,000)

= $12.5/machine hour.

Hence,

total product costs

= Direct materials + Direct labors + Overheads

= (630 + 2,880 + (12.5 × 90))

= $4,635

Hence,

unit product cost = ($4635 ÷ 30)

                              = $154.50

Note: Table is missing, so it is attached with the answer.