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Sivret 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:

Total machine-hours 80,000
Total fixed manufacturing overhead cost $624,000
Variable manufacturing overhead per machine-hour $3.10

Recently, Job M598 was completed with the following characteristics:

Number of units in the job 60
Total machine-hours 300
Direct materials $645
Direct labor cost $9,000

If the company marks up its unit product costs by 40% then the selling price for a unit in Job M598 is closest to:_________

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Answer:

Results are below.

Explanation:

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= (624,000/80,000) + 3.1

Predetermined manufacturing overhead rate= $10.9 per machine hour

Job M598:

Number of units in the job 60

Total machine-hours 300

Direct materials $645

Direct labor cost $9,000

Total cost= 645 + 9,000 + 300*10.9

Total cost= $12,915

Unitary cost= 12,915/60= $215.25

Finally, the selling price per unit:

Selling price= 215.25*1.4= $301.35