Snappy Company has a job-order costing system and uses a predetermined overhead

Question

Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $80,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $3,500 in direct materials and $2,000 in direct labor. The labor rate is $5 per hour. By the end of the year, Snappy had worked a total of 44,500 direct labor-hours and had incurred $85,290 actual manufacturing overhead cost.

Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $80,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $3,500 in direct materials and $2,000 in direct labor. The labor rate is $5 per hour. By the end of the year, Snappy had worked a total of 44,500 direct labor-hours and had incurred $85,290 actual manufacturing overhead cost.

Explanation / Answer

Predetermined overheads per labor hour $          2 80000/40000 Job#334 costs: Direct materials $ 3,500 Direct labor $ 2,000 Overheads applied $     800 2*2000/5 Total costs $ 6,300 Number units in job 150 Unit product cost $        42 6300/150

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