Scorpio makes premium bikes using two departments, assembly and painting.

Assembly estimates using 881,000 machine hours and painting uses 43,000 machine hours. Fixed manufacturing overhead costs are estimated to be $9,000,000 for assembly and $739,000 for painting. Variable manufacturing overhead per machine hour is $11.5 in both departments. Machine hours are used as the allocation base for a plantwide predetermined manufacturing overhead application rate.

A bike dealership shop places an order for 20 bikes. The order requires 1,046 machine hours in assembly and 110 machine hours in painting. The job also requires $54,000 of direct materials and $108,000 of direct labor.

What is the unit product cost (per bike) for the job when Scorpio uses a plantwide approach to calculating its predetermined manufacturing overhead application rate?

Answer rating: 100% (QA)

To calculate the unit product cost per bike we need to add together the direct materials cost direct ... View the full answer