Question

1. Predetermined OH rates (1pt): Konerko Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 66,000 labor-hours. The estimated variable manufacturing overhead was $8.41 per labor-hour and the estimated total fixed manufacturing overhead was $1,533,180. The actual labor-hours for the year turned out to be 68,400 labor-hours.

Compute the company's predetermined overhead rate for the recently completed year.

Unit Product Cost (1pt): Job #MB56 was recently completed. The following data have been recorded on its job cost sheet:

Direct materials	$	59,400
Direct labor-hours		1,224	DLHs
Direct labor wage rate	$	15	per DLH
Number of units completed		3,600	units

The company applies manufacturing overhead on the basis of direct labor-hours. The predetermined overhead rate is $35 per direct labor-hour.

Compute the unit product cost that would appear on the job cost sheet for this job.

Applied Overhead Costs (2pts): Riders Corporation uses a job-order costing system with a single plant-wide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours		40,000
Total fixed manufacturing overhead cost	$	344,000
Variable manufacturing overhead per machine-hour	$	3.90

Recently, Job M759 was completed. It required 60 machine-hours. Calculate the amount of overhead applied to Job M759.

Answer 1

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1. Predetermined overhead Rate
Budgeted Fixed Overhead	a	$1,533,180
Budgeted Labor Hours	b	66,000
Fixed Overhead Rate	a/b=c	$        23.23
Variable Overhead Rate	d	$          8.41
Predetermined overhead Rate	c+d	$        31.64
2. Unit Product Cost
Direct Material		$     59,400
Direct Labor	1224*15	$     18,360
Manufacturing Overhead	1224*35	$     42,840
Total Cost		$   120,600
No of Units		3,600
Unit Product Cost	120600/3600	$        33.50
3. Applied Overhead Cost
Budgeted Fixed Overhead	a	$   344,000
Budgeted Labor Hours	b	40,000
Fixed Overhead Rate	a/b=c	$          8.60
Variable Overhead Rate	d	$          3.90
Predetermined overhead Rate	c+d	$        12.50
Overhead applied to Job M759	60*12.5	$           750