o Sprint 38% EO 12:09 AM ezto.mheducation.com Dallas Company uses a job order co
ID: 2415455 • Letter: O
Question
o Sprint 38% EO 12:09 AM ezto.mheducation.com Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,310,000 (210,000 hours at $11/hour) and that factory overhead would be $1,510,000 for the current period. At the end of the period, the records show that there had been 190,000 hours of direct labor and $1,210,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate? (Round your answer to two decimal places.) $719 per direct labor hour O $5.76 per direct labor hour O $643 per direct labor hour. O $6.84 per direct labor hour O $7.95 per direct labor hourExplanation / Answer
1.
Predetermined overhead rate = Estimated factory overhead / Estimated direct labor hours
Predetermined overhead rate = $1,510,000 / 210,000 hours = $7.19 per direct labor hour
Hence answer is $7.19 per direct labor hour
2.
Materials issued to production = $198,000
Indirect materials = $27,000
Direct material issued = $198,000 - $27,000 = $171,000
Total labor cost = $153,000
Indirect labor = $37,000
Direct labor cost = $153,000 - $37,000 = $116,000
Manufacturing overhead = 150% of direct labor cost = 150% * $116,000 = $174,000
Total manufacturing cost = Direct materials + Direct labor + Manufacturing cost
Total manufacturing cost = $171,000 + $116,000 + $174,000 = $461,000
Hence answer is $461,000
3.
Total labor cost = $157,000
Indirect labor cost = $33,000
Direct labor cost = $157,000 - $33,000 = $124,000
Budgeted manufacturing overhead = $124,000 *150% = $186,000
Actual manufacturing overhead = $196,000
Hence overhead is under-applied by = $196,000 - $86,000 = $10,000
Hence answer is $10,000 under-applied
4.
Overhead applied = $75,000
Overhead allocation rate = 120% of direct labor cost
Direct labor cost = $75,000 / 120% = $62,500
Cost of inventory = Direct materials + Direct labor + Overhead costs
$196,000 = Direct materials + $62,500 + $75,000
Direct materials = $196,000 - $137,500 = $58,500
Hence answer is $58,500
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