Question
In: Accounting
United Kingdom Company has two departments, X and Y. Overhead is applied based on direct labor...
United Kingdom Company has two departments, X and Y. Overhead is applied based on direct labor cost in Department X and machine-hours in Department Y. The following additional information is available:
Budgeted Amounts Department X Department Y
Direct labor cost $180,000 $165,000
Factory overhead $225,000 $200,000
Machine-hours 51,000 mh 40,000 mh
Actual data for Job #25 Department X Department Y
Direct materials requisitioned $15,000 $18,000
Direct labor cost $11,000 $14,000
Machine-hours 5,000 mh 3,000 mh
Required:
a. Compute the budgeted factory overhead rate for Department X.
b. Compute the budgeted factory overhead rate for Department Y.
c. What is the total overhead cost of Job 25?
d. If Job 25 consists of 50 units of product, what is the profit per unit if selling price is $2,000 per unit?
Solutions
Expert Solution
| Answer: |
|
a. Department X :
(Based on Direct Labor
cost) Budgeted factory overhead rate = Factory overhead / Direct labor cost = $225,000/$180,000 = $1.25 |
| Budgeted factory overhead rate for Department X = $1.25 = 125% of DLC |
|
b. Department Y :
(Based on Machine
Hours) Budgeted factory overhead rate = Factory overhead / Machine Hours = $200,000/ 40,000 = $5 |
| Budgeted factory overhead rate for Department Y = $5 per Machine Hour |
|
C. Total overhead cost for Job 25 = ($11,000 x 1.25 )+ ( 3,000 * 5) = $13,750 + $15,000 = $28,750 |
| Total overhead cost for Job 25 = $28,750 |
|
d. No. of units of product = 50 Total cost of product = Direct material cost + Direct Labor Cost +overhead cost for job 25 = ($15,000 + $18,000) + ($14,000 + $11,000) + $28,750 = $86,750 Total cost of product per unit = $86,750 / 50 units = $1,735 Selling price = $2,000 per unit profit = Selling price (-) Total cost = $2,000 (-) $1,735 = $265 |
| Profit per unt = $265 |
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