3 Saved Help Save & Exit S MNO Corporation uses a job-order costing system with

Question

3 Saved Help Save & Exit S MNO Corporation uses a job-order costing system with a predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total estimated direct labor-hours Total estimated fixed manufacturing overhead cost Estimated variable manufacturing overhead per direct labor-hour 50,000 $285,eee 3.80 Recently. Job P123 was completed with the following characteristics: Total actual direct labor-hours Direct materials Direct labor cost 20 710 5ee

Explanation / Answer

Ans. The given options are not correct. Correct answer is $9.5 per direct labor hours

*Calculations:

Predetermined overhead rate = Total estimated manufacturing overhead cost / Total estimated direct labor hours

= 475000 / 50000

= 9.5 per direct labor hour

*Total estimated manufacturing cost = fixed manufacturing cost + variable manufacturing cost

= 285000 + (3.80 * 50000)

= 285000 + 190000

= 475000

*Variable manufacturing cost = variable overhead per direct labor hour * estimated direct labor hour

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