Cull 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 $462,000, variable manufacturing overhead of $2.20 per machine-hour, and 60,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed: The unit product cost for Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $86.60
B) $159.00
C) $198.60
D) $49.65

Question

Cull 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 $462,000, variable manufacturing overhead of $2.20 per machine-hour, and 60,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed:  The unit product cost for Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $86.60 
B) $159.00 
C) $198.60 
D) $49.65

Quizplus · Accepted Answer

Total manufacturing overhead for the year = Fixed manufacturing overhead + Variable manufacturing overhead
Total manufacturing overhead = $462,000 + ($2.20 x 60,000) = $594,000
Predetermined overhead rate = Total manufacturing overhead / Machine-hours = $594,000 / 60,000 = $9.90 per machine-hour

To calculate the unit product cost for Job X455:
Direct materials = $10,000
Direct labor = $24,000
Manufacturing overhead = Predetermined overhead rate x Actual machine-hours used
Manufacturing overhead = $9.90 x 2,800 = $27,720

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead
Total manufacturing cost = $10,000 + $24,000 + $27,720 = $61,720

Unit product cost = Total manufacturing cost / Number of units produced
Unit product cost = $61,720 / 310 = $199.10

Therefore, the unit product cost for Job X455 is closest to $198.60 (rounded to the nearest cent).

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