Question

Braverman Company has two manufacturing departments-Finishing and Fabrication. The predetermined overhead rates in Finishing and Fabrication are $15.00 per direct labor-hour and 120% of direct materials cost, respectively. The company's direct labor wage rate is $22.00 per hour. The following information pertains to Job 700: 

	Finishing	Pabrication
Direct materials	$440	$65
Direct labor	$242	$154

Required:

 1. What is the total manufacturing cost assigned to Job 700?

 2. If Job 700 consists of 30 units, what is the unit product cost for this job? (Round your answer to 2 decimal places.)

Answer 1

Solution:

1.Calculation of total manufacturing cost assigned to Job 700:

The total manufacturing cost assigned to Job 700 = Manufacturing cost assigned to Finishing Department + Manufacturing cost assigned Fabrication Department

Calculation of Manufacturing cost of the Finishing Department:

Direct Labor cost of Finishing Department = $ 242

Direct Labor wage rate = $ 22.00 per hour

Thus the Number of direct Labor hours of Finishing Department

= Direct Labor cost of Finishing Department / Direct Labor wage rate

= $ 242 / $ 22

= 11 hours

Thus the Direct labor hours of Finishing Department = 11 hours

As per the information given in the question the predetermined overhead rate for the Finishing department is $ 15.00 per direct labor-hour

Thus the manufacturing cost of Finishing Department = Direct labor hours of Finishing Department * predetermined overhead rate

= Direct labor hours of Finishing Department * $ 15.00 per direct labor-hour

= 11 * $ 15

= $ 165

Thus the Manufacturing cost of the Finishing Department = $ 165

Calculation of Manufacturing cost of the Fabrication Department:

As per the information given in the question the predetermined overhead rate of the Fabrication Department is 120 % of direct materials cost

The direct materials cost of Fabrication Department is = $ 65

Thus the manufacturing cost of Fabrication Department = Direct materials cost * predetermined overhead rate

= Direct materials cost * 120 % of direct materials cost

= $ 65 * 120 %

= $ 78

Thus the Manufacturing cost of the Fabrication Department = $ 78

We know that the total manufacturing cost assigned to Job 700 = Manufacturing cost assigned to Finishing Department + Manufacturing cost assigned Fabrication Department

= $ 165 + $ 78

= $ 243

The total manufacturing cost assigned to Job 700 = $ 243

2.Calculation of unit product cost for Job 700 when it consists of 30 units :

The unit product cost for Job 700 is calculated as follows:

= [ ( Direct materials cost of Finishing Department + Direct labour cost of the Finishing Department + Manufacturing cost of Finishing Department ) + ( Direct materials cost of Fabrication Department + Direct labour cost of the Fabrication Department + Manufacturing cost of Fabrication Department ) ] / 30

As per the information given in the question we have

Direct materials cost of Finishing Department = $ 440 ; Direct labour cost of the Finishing Department = $ 242   ;

Manufacturing cost of Finishing Department = $ 165 ;

Direct materials cost of Fabrication Department = $ 65 ; Direct labour cost of the Fabrication Department = $ 154 ;

Manufacturing cost of Fabrication Department = $ 78

Applying the above information in the above formula we have

= [ ( $ 440 + $ 242 + $ 165 ) + ( $ 65 + $ 154 + $ 78 ) ] / 30

= ( $ 847 + $ 297 ) / 30

= $ 1,144 / 30

= $ 38.1333

= $ 38.13 ( when rounded off to two decimal places )

Thus the unit product cost for this job is = $ 38.13