1.Gerstein Corporation uses a job-order costing system with a single plantwide p

Question

1.Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.70 per direct labor-hour, and 50,000 direct labor-hours. The company recently completed Job M800 which required 150 direct labor-hours.

The predetermined overhead rate is closest to:

$1.80 per direct labor-hour

$5.50 per direct labor-hour

$9.20 per direct labor-hour

$3.70 per direct labor-hour

2. Schwiesow Corporation has provided the following information:

The incremental manufacturing cost that the company will incur if it increases production from 5,000 to 5,001 units is closest to:

Multiple Choice

$14.40

$15.10

$16.90

$12.20

Cost per Unit Cost per Period Direct materials $ 7.05 Direct labor $ 3.50 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 11,000 Sales commissions $ 1.00 Variable administrative expense $ 0.40 Fixed selling and administrative expense $ 5,500

Explanation / Answer

1) Predetermine overhead rate = (90000/50000)+3.70 = 5.5 per labour hour

so answer is b) $5.50 per labour hour

2) Variable production cost per unit = 7.05+3.50+1.65 = 12.20 per unit

so answer is d) $12.20

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