Part 2
Peter Coffin and Paul Bearer own The Grave Undertaking, Inc. and their firm uses a predetermined overhead rate to apply overhead to the production of custom-built coffins. They use a job order cost system. Overhead is applied on the basis of labor hours in Dept. A and on the basis of machine hours in Dept. B. At the start of the year the company made the following budgets for the year's activity:
Dept. A Dept. B
Direct Material Cost $120,000 $150,000
Total Product Cost 280,000 395,000
Direct labor Cost ???? ????
Overhead ???? $ 100,000
Machine hours 3,000 5,000
Labor hours 2,500 12,000
The Average Direct labor wage rate per hour in Dept. A is $15.
REQUIRED/Solution
1 (a). Calculate the total direct labor cost in Department A.
(b). Calculate the direct labor wage rate in Department B
2. Compute the rate to be used in each department for applying overhead in both departments
3. Assume that during April, the job cost sheet for Job 206 showed the following:
Dept. A Dept. B
Materials requisitioned* $ 4000 $ 3000
Direct labor hours 300 90
Machine hours 80 170
Overhead Applied ? ?
* withdrawn from the inventory.
Required:
Compute the total overhead charged to Job 206.
Compute the cost per unit for the Job 206-assuming the job order was to produce 20 units