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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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Answer:

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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