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19 March, 08:09

Kostelnik 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 total fixed manufacturing overhead cost of $481,900, variable manufacturing overhead of $3.00 per machine-hour, and 79,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed:Number of units in the job 20Total machine-hours 80Direct materials $ 870Direct labor cost $1,740The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.)

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  1. 19 March, 09:07
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    Unitary cost = $167.35

    Explanation:

    Giving the following information:

    The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $481,900, variable manufacturing overhead of $3.00 per machine-hour, and 79,000 machine-hours.

    Job A496:

    Number of units in the job 20

    Total machine-hours 80

    Direct materials $ 870

    Direct labor cost $1,740

    First, we need to calculate the estimated manufacturing overhead rate we need to use the following formula:

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    Estimated manufacturing overhead rate = (481,900/79,000) + 3 = $9.1 per machine hour

    Now, we need to calculate the total cost per unit:

    Unitary cost = direct material + direct labor + allocated overhead

    Unitary cost = (879/20) + (1,740/20) + (80*9.1) / 20 = $167.35
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