Lamberson 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-hours50,000?Total fixed manufacturing overhead cost$460,000?Variable manufacturing overhead per machine-hour$3.10Recently Job P647 was completed with the following characteristics:?Number of units in the job50?Total machine-hours150?Direct materials$740?Direct labor cost$6,000Required:a. Calculate the amount of overhead applied to Job P647.b. Calculate the total job cost for Job P647.c. Calculate the unit product cost for Job P647.

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) = $460,000 + ($3.10 per machine-hour × 50,000 machine-hours) = $460,000 + $155,000 = $615,000

Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $615,000 ÷ 50,000 machine-hours = $12.30 per machine-hour

Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $12.30 per machine-hour × 150 machine-hours = $1,845