Sivret 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: Recently, Job M598 was completed with the following characteristics:
If the company marks up its unit product costs by 40% then the selling price for a unit in Job M598 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $321.35
B) $225.05
C) $86.10
D) $301.35

Question

Sivret 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:  Recently, Job M598 was completed with the following characteristics:
 If the company marks up its unit product costs by 40% then the selling price for a unit in Job M598 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $321.35 
B) $225.05 
C) $86.10 
D) $301.35

Quizplus · Accepted Answer

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) = $624,000 + ($3.10 per machine-hour × 80,000 machine-hours) = $624,000 + $248,000 = $872,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $872,000 ÷ 80,000 machine-hours = $10.90 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $10.90 per machine-hour × 300 machine-hours = $3,270
 11eacbfc_c71f_d33f_8ffe_131dc8e975e5_TB7552_00 11eacbfc_c71f_fa50_8ffe_cf07f71135fc_TB7552_00 11eacbfc_c720_2161_8ffe_a381897f167a_TB7552_00

Sivret Corporation Uses a Job-Order Costing System with a Single