Obermeyer Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 10,000 direct labor-hours, total fixed manufacturing overhead cost of $96,000, and a variable manufacturing overhead rate of $3.60 per direct labor-hour. Job A735, which was for 40 units of a custom product, was recently completed. The job cost sheet for the job contained the following data:?Total direct labor-hours200?Direct materials$540?Direct labor cost$6,400Required:a. Calculate the amount of overhead applied to Job A735.b. Calculate the total job cost for Job A735.c. Calculate the unit product cost for Job A735.

Question

What will be an ideal response?

Answer 1

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) = $96,000 + ($3.60 per direct labor-hour × 10,000 direct labor-hours) = $96,000 + $36,000 = $132,000

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $132,000 ÷ 10,000 direct labor-hours = $13.20 per direct labor-hour

Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $13.20 per direct labor-hour × 200 direct labor-hours = $2,640