Question

Exercise 2-7 Job-Order Costing; Working Backwards [LO2-1, LO2-2, LO2-3] Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $15 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 54,500 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below: 0.62 points Job Alpha eBook Direct materials Direct labor Hint Manufacturing overhead applied Print $ 1,533,500 Total job cost References Job Omega $ 235,000 345,000 184,000 Direct materials Direct labor Manufacturing overhead applied $ 764,000 Total job cost

Answer 1

1

Hours used by Omega = Direct labor cost/ Per hour rate = $345,000 / $15 = 23,000 hours

Plant wide overhead rate = Omega manufacturing overhead applied/ Direct labor hours

= $184,000/ 23,000 = $8 per hour

2

Direct labor = Hours used × rate per hour = 54,500 × $15 = $817,500

Manufacturing overhead applied = hours used × rate per hour = 54,500 × $8 = $436,000

Job alpha cost = $1,533,500

Direct materials + 54,500 hours × $15 + 54,500 hours × $8= $1,533,500

Direct materials = $1,533,500 - $1,253,500 = $280,000

Filled in job cost report is:

Direct materials	$          280,000
Direct labor	$          817,500
Manufacturing overhead	$          436,000
Total job cost	$       1,533,500