Coates 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 $249,000,variable manufacturing overhead of $3.80 per machine-hour,and 30,000 machine-hours.The company has provided the following data concerning Job X784 which was recently completed:
If the company marks up its unit product costs by 30% then the selling price for a unit in Job X784 is closest to:
A) $253.87
B) $233.87
C) $53.97
D) $155.22

Question

Coates 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 $249,000,variable manufacturing overhead of $3.80 per machine-hour,and 30,000 machine-hours.The company has provided the following data concerning Job X784 which was recently completed:
 If the company marks up its unit product costs by 30% then the selling price for a unit in Job X784 is closest to:
A) $253.87 
B) $233.87 
C) $53.97 
D) $155.22

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) = $249,000 + ($3.80 per machine-hour × 30,000 machine-hours) = $249,000 + $114,000 = $363,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $363,000 ÷ 30,000 machine-hours = $12.10 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $12.10 per machine-hour × 250 machine-hours = $3,025
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Coates Corporation Uses a Job-Order Costing System with a Single