Nielsen Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
During the most recent month, the company started and completed two jobs--Job F and Job M. There were no beginning inventories. Data concerning those two jobs follow:

-The unit product cost for Job K332 is closest to:
A) $94.10
B) $18.10
C) $82.50
D) $47.05

Question

Nielsen Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
  During the most recent month, the company started and completed two jobs--Job F and Job M. There were no beginning inventories. Data concerning those two jobs follow:
 
-The unit product cost for Job K332 is closest to:
A) $94.10 
B) $18.10 
C) $82.50 
D) $47.05

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) = $33,000 + ($2.50 per direct labor-hour × 10,000 direct labor-hours) = $33,000 + $25,000 = $58,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $58,000 ÷ 10,000 direct labor-hours = $5.80 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.80 per direct labor-hour × 140 direct labor-hours = $812
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Nielsen Corporation Has Two Manufacturing Departments--Machining and Assembly