Irene Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Percentage

question 11

Multiple Choice

Irene Manufacturing uses a predetermined overhead allocation rate based on percentage of direct labor cost. At the beginning of 2014, Irene estimated total manufacturing overhead costs at $1,050,000 and total direct labor costs at $840,000. In June, 2014, Job 711 was completed. Job stats are as follows: $$\begin{array} { | l | r | } \hline \text { Direct materials cost } & \$ 27,500 \\\hline \text { Direct labor cost } & \$ 13,000 \\\hline \text { Direct labor hours } & 400 \text { hours } \\\hline \text { Units of product produced } & 200 \\\hline\end{array}$$ How much was the cost per unit of finished product?

• A) $374.38
• B) $202.50
• C) $254.50
• D) $283.75

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Definitions:

Finished Goods Inventory

Represents the value of a company's completed products ready for sale but not yet sold at the end of an accounting period.

Occupancy Rate

The ratio or percentage of occupied spaces to the total number of available spaces in a facility, such as a hotel or apartment complex.

Hotel Industry

A sector of the hospitality industry focusing on providing accommodation, meals, and other services for travelers and tourists.

Manufacturing Process

A sequence of operations that transforms raw materials or components into finished goods.