Venus Manufacturing uses a predetermined overhead allocation rate based on percentage of direct labor cost. At the beginning of the year, they fixed the manufacturing overhead rate at 20% times the direct labor cost. In the month of June, Venus completed Job 13C the costs of which are as follows: $$\begin{array} { | l | r | }
\hline \text { Direct materials cost } & \$ 6,220 \
\hline \text { Direct labor cost } & \$ 900 \
\hline \text { Direct labor hours } & 32 \text { hours } \
\hline \text { Units of product produced } & 250 \text { units } \
\hline
\end{array}$$ What is the cost per unit of finished product of Job 13C?

Question

Venus Manufacturing uses a predetermined overhead allocation rate based on percentage of direct labor cost. At the beginning of the year, they fixed the manufacturing overhead rate at 20% times the direct labor cost. In the month of June, Venus completed Job 13C the costs of which are as follows: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost } & \$ 6,220 \
\hline \text { Direct labor cost } & \$ 900 \
\hline \text { Direct labor hours } & 32 \text { hours } \
\hline \text { Units of product produced } & 250 \text { units } \
\hline
\end{array}$$ What is the cost per unit of finished product of Job 13C?

Quizplus · Accepted Answer

The correct answer is A. The cost per unit of finished product is calculated by dividing the total cost of the job by the number of units produced. The total cost of the job is the sum of the direct materials cost, direct labor cost, and manufacturing overhead cost. The manufacturing overhead cost is calculated by multiplying the direct labor cost by the predetermined overhead allocation rate. In this case, the predetermined overhead allocation rate is 20%, so the manufacturing overhead cost is $900 x 20% = $180. The total cost of the job is $6,220 + $900 + $180 = $7,300. The cost per unit of finished product is $7,300 / 250 units = $29.20.

Venus Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Percentage