Winston Company applies overhead cost to jobs on the basis of direct labor cost.

Question

Winston Company applies overhead cost to jobs on the basis of direct labor cost. Job X, which was started and completed during the current period, shows charges of $6,300 for direct materials, $9,700 for direct labor, and $6,111 for overhead on its job cost sheet. Job Q, which is still in process at year-end, shows charges of $4,200 for direct materials, and $5,000 for direct labor.

A company assigns overhead cost to completed jobs on the basis of 113% of direct labor cost. The job cost sheet for Job 413 shows that $24,687 in direct materials has been used on the job and that $10,100 in direct labor cost has been incurred. A total of 1,650 units were produced in Job 413.

Winston Company applies overhead cost to jobs on the basis of direct labor cost. Job X, which was started and completed during the current period, shows charges of $6,300 for direct materials, $9,700 for direct labor, and $6,111 for overhead on its job cost sheet. Job Q, which is still in process at year-end, shows charges of $4,200 for direct materials, and $5,000 for direct labor.

Explanation / Answer

Hi,

Please find the answer as follows

Part A:

Overhead to Direct Labor Cost Ratio Would be = 6111/9700 = .63:1

Overhead Cost to be Added for Job Q would be = .63*5000 (Direct Labor for Q) = 3150

Answer for Part A is 3150

Part B:

Total Manufacturing Costs for job 413 = 24687 (Direct Material) + 10100 (Direct Labor) + 113%*10100 (Overhead) = 46200

Unit Product Cost for Job 413= 46200/1650 = 28

Thanks.

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