Irene Manufacturing Uses a Predetermined Overhead Allocation Rate Based on a Percentage

question 148

Multiple Choice

Irene Manufacturing uses a predetermined overhead allocation rate based on a percentage of direct labor cost.At the beginning of the year,the company estimated total manufacturing overhead costs at $1,000,000 and total direct labor costs at $820,000.In June,Job 711 was completed.The details of Job 711 are shown below. $$\begin{array} { | l | r | } \hline \text { Direct materials cost } & \$ 20,500 \\\hline \text { Direct labor cost } & \$ 11,000 \\\hline \text { Direct labor hours } & 500 \text { hours } \\\hline \text { Units of product produced } & 200 \text { units } \\\hline\end{array}$$
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) $157.50
• B) $202.60
• C) $169.60
• D) $224.60

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Definitions:

After-Tax Cash Flow

The amount of cash a company generates after accounting for all taxes, an important measure for assessing financial performance and investment potential.

After-Tax Payback Period

The amount of time it takes for an investment to generate enough after-tax returns to recover the initial cost of the investment.

Tax Effect

The impact of taxes on financial decisions or operations, including how taxes influence the profitability, cash flow, and cost of different options.

Investment Allowance

A tax incentive that allows businesses to deduct a percentage of investment in certain assets from their income, encouraging capital investment.