Question

Answer the problem on an Excel Spreadsheet

E4-2 Predetermined Overhead Rate; Job Cost Sheet Furniture, Inc. uses a job order costing system. Overhead is applied on the basis of direct labor cost in department A and machine-hours in department B. At the start of Year 6, the company made the following estimates: Department A Department B Direct labor-hours 15,000 5,000 Machine-hours 2,500 20,000 Manufacturing overhead cost $80,000 $72,000 Direct labor cost $64,000 $42,000 Required: 1. Compute the predetermined overhead rate to be used in Department A and in Department B. 2. The cost sheet for Job X-101 showed the following: Department B 30 10 Department A Direct labor-hours Machine-hours Materials requisitioned $550 Direct labor cost $120 Compute the overhead applied to Job X-101. Compute the total job cost charged to X-101. $150 $35 3.

Answer 1

1)	predetermined overhead
	Department A
	Predetermined overhead rate = Total overhead/number of hours
	=$80000/15000 hours
	=$5.33 per hour
	Department B
	=$72000/20000 hours
	=$3.6 per hour
2)	Overhead cost applied to job X-101
	Department A			$                   160
	( =$5.333333*30)
	Department B			$                   216
	($3.60*60)
	Total			$                   376
3)	Job cost charge to Job X-101
	Direct Materials		$             700
	($550+150)
	Direct Labor		$             155
	($120+35)
	Overhead applied		$             376
	Total		$         1,231