Bolander 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 M825 was completed with the following characteristics:

-The unit product cost for Job M825 is closest to:
A) $37.81
B) $59.25
C) $151.25
D) $125.25

Question

Bolander 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 M825 was completed with the following characteristics:
 
-The unit product cost for Job M825 is closest to:
A) $37.81 
B) $59.25 
C) $151.25 
D) $125.25

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) = $294,000 + ($2.30 per machine-hour × 70,000 machine-hours) = $294,000 + $161,000 = $455,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $455,000 ÷ 70,000 machine-hours = $6.50 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $6.50 per machine-hour × 80 machine-hours = $520
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Bolander Corporation Uses a Job-Order Costing System with a Single