Pangle Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:??FormingCustomizing?Machine-hours16,00012,000?Direct labor-hours4,0009,000?Total fixed manufacturing overhead cost$91,200$99,000?Variable manufacturing overhead per machine-hour$2.10??Variable manufacturing overhead per direct labor-hour?$3.10During the current month the company started and finished Job M109. The following data
were recorded for this job:?Job M109:FormingCustomizing?Machine-hours5030?Direct labor-hours2050?Direct materials$915$355?Direct labor cost$620$1,550Required:Calculate the total job cost for Job M109.
What will be an ideal response?
Forming Department:
Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $91,200 + ($2.10 per machine-hour × 16,000 machine-hours)
= $91,200 +$33,600 = $124,800
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $124,800 ÷ 16,000 machine-hours = $7.80 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.80 per machine-hour × 50 machine-hours = $390
Customizing Department:
Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $99,000 + ($3.10 per direct labor-hour × 9,000 direct labor-hours)
= $99,000 + $27,900 = $126,900
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $126,900 ÷9,000 direct labor-hours = $14.10 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.10 per direct labor-hour × 50 direct labor-hours = $705
Overhead applied to Job M109
| ? | Forming Department | $390 |
| ? | Customizing Department | 705 |
| ? | Total | $1,095 |
| ? | ? | Forming | Customizing | Total |
| ? | Direct materials | $915 | $355 | $1,270 |
| ? | Direct labor | $620 | $1,550 | 2,170 |
| ? | Manufacturing overhead applied | $390 | $705 | 1,095 |
| ? | Total cost of Job M109 | ? | ? | $4,535 |
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