Question

Please explain how to get the correct answer!

Irene Manufacturing uses a predetermined overhead allocation rate based on direct labor cost. At the beginning of the​ year, the company estimated total manufacturing overhead costs at $1,030,000 and total direct labor costs at $820,000.

In​ June, Job 711 was completed. The details of Job 711 are shown below.

Direct materials cost	$20,000
Direct labor cost	$13,000
Direct labor hours	500 hours
Units of product produced	400 units

How much was the cost per unit of finished​ product? (Round any percentages to two decimal places and your final answer to the nearest​ cent.)

A. $90.82

B. $123.32

C. $82.50

D. $108.37

Answer 1

Correct answer ----(b) $ 123.32

Calculation of Cost per Unit
A	Direct material	$   20,000.00
B	Direct labor	$   13,000.00
C=B x 125.61%	Manufacturing Overheads	$   16,329.30
D=A+B+C	Total Cost	$   49,329.30
E	Number of Units produced	400
F=D/E	Cost per Unit	$         123.32

Predetermined overhead rate
Estimated Overheads	$ 1,030,000.00
Estimated Direct labor cost	$      820,000.00
Predetermined overhead rate per $ of direct labor	125.61%