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?

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