Alsobrooks 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-hours40,000?Total fixed manufacturing overhead cost$156,000?Variable manufacturing overhead per machine-hour$2.20Recently Job M242 was completed with the following characteristics:?Number of units in the job20?Total machine-hours60?Direct materials$725?Direct labor cost$1,680Required:a. Calculate the total job cost for Job M242.b. Calculate the unit product cost for Job M242.
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) = $156,000 + ($2.20 per machine-hour × 40,000 machine-hours) = $156,000 + $88,000 = $244,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $244,000 ÷ 40,000 machine-hours = $6.10 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $6.10 per machine-hour × 60 machine-hours = $366
| ? | Direct materials | $725 |
| ? | Direct labor | 1,680 |
| ? | Manufacturing overhead applied | 366 |
| ? | Total cost of Job M242 | $2,771 |
| b. | Total cost of Job M242 (a) | $2,771 |
| ? | Number of units (b) | 20 |
| ? | Unit product cost (a) ÷ (b) | $138.55 |
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