Compute the total overhead cost applied to Job 127. (Round predetermined overhea

Question

Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.) Using the following information:

WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:

  

Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:

Requred:   

The predetermined overhead rate used during the year in the Preparation Department is $5.40 per MH.

The Fabrication Department predetermined overhead rate is $13.60 per DLH

2. Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.)

   

Department Preparation Fabrication Machine-hours 89,000 30,000 Direct labor-hours 32,000 59,800 Direct materials cost $ 188,000 $ 198,000 Direct labor cost $ 271,000 $ 513,000 Fixed manufacturing overhead cost $ 213,600 $ 514,280 Variable manufacturing overhead per machine-hour $ 3.00 - Variable manufacturing overhead per direct labor-hour - $ 5.00

Explanation / Answer

When the predetermined overheads 5.40 per MH and 13.60 per DLH are given within the question, all the data provided in the first table ( table - 1) is irrelevant. So we can directly go for computing the Job 127 Total overhead cost calculation as under

Total overhead cost applied = Preparation dep allocation + Fabrication dept allocation

= 310 Machine hours * 5.40 per MH + 126 Direct labor hours * 13.6 per DLH

= 3387.6...............(or) 3388 .......................Final answer

Note that question requires .......computation of overhead allocation only. As such we cannot include the material cost and labour cost. If we include such things we get total cost of Job 127, which is not the question requires.

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