. Live Edge Table uses a job-order cost system. The company applies manufacturin

ID: 2567288 • Letter: #

Question

. Live Edge Table uses a job-order cost system. The company applies manufacturing

overhead to jobs using a predetermined overhead rate based on direct labor hours.

The estimated MOH was $245,000 for the year and the estimated direct labor hours

were 20,000 hours.

In June, Job #325 was completed. Direct materials totaled $17,900. Total labor costs were $5,000 at $10 per hour.

At the end of the year, it was determined that the company worked 16,000 direct labor hours for the year, and incurred $178,000 in actual manufacturing overhead costs.

REQUIRED:

a. Calculate the predetermined overhead rate for the year.

b. Determine the amount of overhead charged to jobs during the year.

c. Determine the amount of under- or over-applied overhead for the year.

d. Prepare a job cost sheet for Job #325 using the information given. Assuming that

75 units were completed, determine the unit product cost.

Explanation / Answer

Ans:

1. Predetermined overhead rate= Estimated Manufacturing overhead/Estimated direct labor hours

= $245000/20000

= $12.25 per direct labor hour

2. Overhead cost charged to job

= $12.25*16000=$196000

3. Over applied overhead cost= $196000-$178000

= $18000

4. Job cost sheet for job #325

Particulars

Direct materials

17900

Direct labor costs

5000

Manufacturing overhead applied

196000

Total manufacturing costs

$218900

Unit product cost

$218900/75=$2919 per unit