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23 January, 15:25

Next Generation's predetermined overhead rate is $16 per direct labor-hour and its direct labor wage rate is $11 per hour. Job #1987 used $1,202 of direct materials and $5,500 of direct labor.

Question:

If Job #1987 consists of 100 units, what is the average cost assigned to each unit included in the job?

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  1. 23 January, 15:28
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    Unitary cost = $147.02

    Explanation:

    Giving the following information:

    Next Generation's predetermined overhead rate is $16 per direct labor-hour and its direct labor wage rate is $11 per hour. Job1987 used $1,202 of direct materials and $5,500 of direct labor.

    First, we need to calculate the allocated overhead to Job 1987:

    direct labor hours = 5,500/11 = 500 hours

    Allocated overhead = 500*16 = $8,000

    Now, we can calculate the total cost and unitary cost of Job 1987:

    Total cost = 1,202 + 5,500 + 8,000 = $14,702

    Unitary cost = 14,702/100 units = $147.02
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