Irene Manufacturing uses a predetermined overhead allocation rate based on direct labor cost.At the beginning of the year,the company estimated total manufacturing overhead costs at $1,020,000 and total direct labor costs at $820,000.In June,Job 711 was completed.The details of Job 711 are shown below. $\begin{array} { |l | l| }
\hline \text { Direct materials cost } & \$ 21,500 \
\hline \text { Direct labor cost } & \$ 10,000 \
\hline \text { Direct labor hours } & 400 \text { hours } \
\hline \text { Units of product produced } & 200 \text { units } \
\hline
\end{array}$ How much was the cost per unit of finished product? (Round any percentages to two decimal places and your final answer to the nearest cent.)

Question

Irene Manufacturing uses a predetermined overhead allocation rate based on direct labor cost.At the beginning of the year,the company estimated total manufacturing overhead costs at $1,020,000 and total direct labor costs at $820,000.In June,Job 711 was completed.The details of Job 711 are shown below. $\begin{array} { |l | l| } 
\hline \text { Direct materials cost } & \$ 21,500 \
\hline \text { Direct labor cost } & \$ 10,000 \
\hline \text { Direct labor hours } & 400 \text { hours } \
\hline \text { Units of product produced } & 200 \text { units } \
\hline
\end{array}$ How much was the cost per unit of finished product? (Round any percentages to two decimal places and your final answer to the nearest cent.)

Quizplus · Accepted Answer

$\begin{array}{llcc}
  \text {Estimated manufacturing overhead costs for the year  } &\$1,020,000  \
 \text {Estimated total direct labor costs  } &820,000\
 \text { Predetermined overhead allocation rate as a } &\$ 10,000 \times 1.2439\ 
 \text { Percentage of direct labor cost $ (\$ 1,020,000 / 820,000) $ } &124.39\%\
\
 \underline{\text { Calculation of cost per unit:} } &\
 \text { Direct materials cost } &\$21,500\
  \text { Direct labor cost } &10,000  \
 \text {Manufacturing overhead costs allocated to Job 711  } &\underline{12,439}\
 \text { Total job cost of Job 711(A) } &34,939\
 \text {Number of units produced (B)  } &\underline{200}\
 \text {  Cost per unit $ (\mathrm{A} / \mathrm{B}) $} &\$219.70\
\end{array}$

Irene Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Direct