Ryans Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: ?Total machine-hours10,000?Total fixed manufacturing overhead cost$71,000?Variable manufacturing overhead per machine-hour$2.50Recently Job P512 was completed with the following characteristics:?Number of units in the job30?Total machine-hours60?Direct materials$870?Direct labor cost$2,400Required:a. Calculate the predetermined overhead rate for the year.b. Calculate the amount of overhead applied to Job P512.c. Calculate the total job cost for Job P512.d. Calculate the unit product cost for Job P512.
What will be an ideal response?
a. Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $71,000 + ($2.50 per machine-hour × 10,000 machine-hours) = $71,000 + $25,000 = $96,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $96,000 ÷ 10,000 machine-hours = $9.60 per machine-hour
b. Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $9.60 per machine-hour × 60 machine-hours = $576
| c. | Direct materials | $870 |
| ? | Direct labor | 2,400 |
| ? | Manufacturing overhead applied | 576 |
| ? | Total cost of Job P512 | $3,846 |
| d. | Total cost of Job P512 (a) | $3,846 |
| ? | Number of units (b) | 30 |
| ? | Unit product cost (a) ÷ (b) | $128.20 |
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