Question

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.


Job 102 Job 103 Job 104
Direct materials $15,000 $33,000   $27,000  
Direct labor 8,000 14,200   21,000
Overhead applied 4,000 7,100   10,500


Using the accumulated costs of the jobs, what predetermined overhead rate is used?

Answer 1

Answer:

Job 102 = 29.69% of the Manufacturing Cost.

Job 103 Predetermined overhead rate =26.15%of the Manufacturing Cost.

Job 104 Predetermined overhead rate= 35.89%of the Manufacturing Cost.

Job 102  =  50% of direct labor Cost

Job 103 Predetermined overhead rate 50%of direct labor Cost

Job 104 Predetermined overhead rate= 50%of direct labor Cost

Explanation:

Total Manufacturing Costs

                                           Job 102        Job 103          Job 104

Direct materials                $15,000        $33,000          $27,000  

Direct labor                          8,000           14,200            21,000

Overhead applied                4,000            7,100              10,500

Total                                     $27000         54,300           58500

Predetermined overhead rate = Overhead applied/ Direct Labor Cost *100

                                  Job 102  = 8000/4000 *100= 50% of direct labor Cost

  Job 103 Predetermined overhead rate=14200/ 7100 (100) = 50%of direct labor Cost

Job 104 Predetermined overhead rate=21000/ 10500 (100) = 50%of direct labor Cost

Using the accumulated costs

Predetermined overhead rate = Overhead applied/ Accumulated Costs (100

                                       Job 102 =8000/27000*100= 29.69% of the Manufacturing Cost.

Job 103 Predetermined overhead rate=14200/ 54300 (100) =  26.15%of the Manufacturing Cost.

Job 104 Predetermined overhead rate=21000/ 58500 (100) = 35.89%of the Manufacturing Cost.