Question

In December 2016, Shire Computer’s management establishes the 2017 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $741,000 of overhead costs and $570,000 of direct labor cost in year 2017. During March 2017, Shire began and completed Job 13-56.

  
1. What is the predetermined overhead rate for 2017?
2. Using the information on the following job cost sheet, determine the total cost of the job.

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

What is the predetermined overhead rate for 2017?

	Overhead Rate Choose Numerator: / Choose Denominator: = Overhead Rate / = Overhead rate / =

Using the information on the following job cost sheet, determine the total cost of the job. (Round your answers to the nearest dollar amount.)

JOB COST SHEET: Job No. 13-56 Direct Materials Direct Labor Overhead Total Cost Date Requisition No. Amount Time-Ticket No. Amount Costs Applied Mar. 8 4-129 $3,000 T-306 $620 Mar. 11 4-142 6,850 T-432 1,320 Mar. 18 4-167 3,900 T-456 1,280 $

Answer 1

Solution:
1.	Overhead Rate
	Choose Numerator:	/	Choose Denominator:	=	Overhead Rate
	Estimated overhead cost	/	Estimated labor cost	=	Overhead rate
	$741,000	/	$570,000	=	130%
Working Notes:
	Pre determine overhead rate =Estimated overhead costs / Estimated direct labor cost
	Total Estimated overhead costs =$741,000
	Estimated direct labor cost =$570,000
	Pre determine overhead rate =Estimated overhead costs / Estimated direct labor cost
		=$741,000/$570,000
		=1.30
		= 130%
2.		JOB COST SHEET: Job No. 13-56
		Direct Materials		Direct Labor		Overhead	Total Cost
	Date	Requisition No.	Amount	Time-Ticket No.	Amount	Costs Applied
	Mar. 8	4-129	$3,000	T-306	$620	806	$4,426
	Mar. 11	4-142	6,850	T-432	1,320	1716	$9,886
	Mar. 18	4-167	3,900	T-456	1,280	1664	$6,844
			$13,750		$3,220	$4,186	$21,156
Working Notes:
			I		II	III	IV= I+II+III
		JOB COST SHEET: Job No. 13-56
		Direct Materials		Direct Labor		Overhead	Total Cost
	Date	Requisition No.	Amount	Time-Ticket No.	Amount	Costs Applied
a	Mar. 8	4-129	$3,000	T-306	$620	806	$4,426
b	Mar. 11	4-142	6,850	T-432	1,320	1716	$9,886
c	Mar. 18	4-167	3,900	T-456	1,280	1664	$6,844
d=a+b+c			$13,750		$3,220	4186	$21,156
	Total cost = Direct material cost + Direct labor cost + Overhead applied
	Overhead applied = Direct labor cost x Predetermined OH rate
	=Direct labor cost x 130%
	Calculation of total cost
	Direct Materials	3000+6850+3900	13,750
	Direct labor	620+1320+1280	3,220
	Overhead	806+1716+1664	4,186
	[130% x Direct labor cost]
	620x130%=806
	1320x130%=1716
	1280x130%=1664
	Total cost		21,156
Please feel free to ask if anything about above solution in comment section of the question.