Sutter 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 T369 was completed with the following characteristics:
If the company marks up its unit product costs by 20% then the selling price for a unit in Job T369 is closest to:
A) $324.56
B) $304.56
C) $277.20
D) $50.76

Question

Sutter 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 T369 was completed with the following characteristics:
 If the company marks up its unit product costs by 20% then the selling price for a unit in Job T369 is closest to:
A) $324.56 
B) $304.56 
C) $277.20 
D) $50.76

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) = $35,000 + ($2.20 per machine-hour × 10,000 machine-hours) = $35,000 + $22,000 = $57,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $57,000 ÷ 10,000 machine-hours = $5.70 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $5.70 per machine-hour × 40 machine-hours = $228
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Sutter Corporation Uses a Job-Order Costing System with a Single