Venus Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Percentage

question 72

Multiple Choice

Venus Manufacturing uses a predetermined overhead allocation rate based on percentage of direct labor cost. At the beginning of the year, they fixed the manufacturing overhead rate at 20% times the direct labor cost. In the month of June, Venus completed Job 13C the costs of which are as follows: $$\begin{array} { | l | r | } \hline \text { Direct materials cost } & \$ 6,220 \\\hline \text { Direct labor cost } & \$ 900 \\\hline \text { Direct labor hours } & 32 \text { hours } \\\hline \text { Units of product produced } & 250 \text { units } \\\hline\end{array}$$ What is the cost per unit of finished product of Job 13C?

• A) $29.20
• B) $33.46
• C) $28.48
• D) $36.70

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Definitions:

Trade Credit

A type of commercial financing in which a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Line of Credit

A flexible loan from a bank or financial institution that offers a borrower a maximum amount of money they can borrow over a specified time period.

Receivable Financing

A financing arrangement where a business uses its accounts receivable as collateral for a loan, improving cash flow.

Commercial Banks

are financial institutions that offer a wide range of services such as accepting deposits, providing business and personal loans, and other financial products and services to the public.