Question

multiple choice question
jones company uses a job - order costing system with a predetermined overhead rate of 120% of direct labor cost. the job cost sheet for job #420 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. the unit cost of job #420 is ______.

○ $1.33
○ $1.20
○ $2.00

Explanation:

Step1: Calculate manufacturing overhead

$\text{Manufacturing Overhead} = 120\% \times \text{Direct Labor Cost} = 1.2 \times 5000 = 6000$

Step2: Compute total job cost

$\text{Total Job Cost} = \text{Direct Materials} + \text{Direct Labor} + \text{Manufacturing Overhead} = 4000 + 5000 + 6000 = 15000$

Step3: Find unit cost

$\text{Unit Cost} = \frac{\text{Total Job Cost}}{\text{Number of Units}} = \frac{15000}{7500} = 2$

Answer:

$2.00$