Snappy Company has a job-order cost system and uses a predetermined overhead rat

Question

Snappy Company has a job-order cost system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor-hours were estimated at $100,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,000 in direct materials and $2,400 in direct labor. The labor rate is $6 per hour. By the end of the year, Snappy had worked a total of 45,000 direct labor-hours and had incurred $110,250 actual manufacturing overhead cost. If Job #334 contained 200 units, the unit cost on the completed job cost sheet would be: (Points : 5) $37.00. $42.00. $41.90. $39.50.

Explanation / Answer

Cost per unit is $39.50 and the working for the same is as under:- Total cost of 200 units in case of Job no 334 :- Direct Material : $5,000.00 Direct Labour : $2,400.00 Total Direct Cost : $7,400.00 Add :- Manufacturing Overhead Cost : $500.00 (Estimated Overhead/Estimated Labour hours = 100000/40000 = $2.5 per unit) Total Cost of 200 Units = $7,900.00 Cost per Unit :- $39.50 (i.e 7900/200)

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