Echher Corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. During the year the company's Finished Goods inventory account was debited for $218,000 and credited for $218,500. The ending balance in the Finished Goods inventory account was $13,000. At the end of the year, manufacturing overhead was overapplied by $36,700.
-If Job #461 contained 100 units,the unit product cost on the completed job cost sheet would be:
A) $61.75
B) $62.50
C) $63.10
D) $55.00

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
Predetermined overhead rate = $50,000 ÷ 20,000 direct labor-hours = $2.50 per direct labor-hour
Direct labor-hours on Job #461 = $1,500 ÷ $5 per direct labor-hour = 300 direct labor-hours
Unit Product Cost
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Echher Corporation Uses a Job-Order Costing System and Applies Overhead