Custom Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours

Total fixed manufacturing overhead cost

Variable manufacturing overhead per machine-hour

Recently Job P512 was completed with the following characteristics:

10,000

$71,000 $ 2.50

Number of units in the job

30

Total machine-hours

60

Direct materials

$ 870

Direct labor cost

$2,400

Required:

a. Estimate the total manufacturing overhead cost. (3 marks)

b. Calculate the predetermined overhead rate for the year. (2 marks)

c. Calculate the amount of overhead applied to Job P512. ( 2 marks)

d. Calculate the total job cost for Job P512 (3 marks)

e. Calculate the unit product cost for Job P512 (2 marks).

f. Why do most companies use predetermined overhead rates rather than actual overhead rates? (3 marks)