Question

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EXHIBIT 2-5 Dickson Company: An Example Using Multiple Predetermined Overhead Rates Step 1: Calculate the estimated total manufacturing overhead cost for each department. Miling Department Overhead Cost (Y): Assembly Department Overhead Cost (Y): = $390,000 + ($2.00 per MH X 60.000 MHS) = $500,000 + ($3.75 per DLH X 80,000 DLHs) = $390,000+ $120,000 = $500,000 + $300,000 = $510,000 = $800,000 Step 2: Calculate the predetermined overhead rate in each department. Milling Department Overhead Rate: Assembly Department Overhead Rate: $510,000 $800,000 60,000 machine-hours 80,000 direct labor-hours = $8.50 per machine-hour = $10.00 per direct labor-hour Step 3: Calculate the amount of overhead applied from both departments to Job 407. Milling Department Overhead Applied to Job 407 Assembly Department: Overhead Applied to Job 407 = $8.50 per MH x 90 MHS = $10.00 per DLH x 20 DLHS = $765 = $200 Step 4: Calculate the total job cost for Job 407. Direct materials .......... Direct labor .... Manufacturing overhead applied .......... Total cost of Job 407 Milling Assembly $800 $370 $ 70 $280 $765 $200 Total $1,170 350 965 $2,485 Step 5: Calculate the selling price for Job 407. Total cost of Job 407 .... Markup ($2,485 x 75%) Selling price of Job 407 ........... $2,485.00 1,863.75 $4,348.75

Answer 1

Uange the Tolal fised Manuhuchuting averhesd Cast for the milling Defarlt maet 4.390,000. Calulake the estimate Total manuhuluing overheaul Cost for dach defalimaut: SteR Assauldy Defartmeut overhead Lost milling Defallment loest- 3,90,000 (As Per quastioa) Sono00t (3-75Pes DLHX 8e0e0DLH) Stepe Predelesmined eveshead fate in ealh defaltmant Astembly nefaltimeat overkend Qute miling Defulmant overhaul fate -) 390000 800000 8o000 DLH )$ 1o Pes DLH. eogeco. $65Pe Machine Hour fate Ameunt of oveshead Appricd for Beth Defartmeuts SteP3 milling Defatlmeat ovekedl į Applied to Jeb 408 ASseubly pefaiterat: overkena Appled to Jeb 408 65 Pes MH X 60 MHS 1o Res DLH X 40 4S $ 400

Tokal Job Cast for Job 4o8 Stept Calaulate. the mling Asseubdy Totef &830 Direct malerial Direct lebous $ 690 $400 $813 $133 Manufaku ing overdead Appliced 8 390 82633 Tokal Cost of Job to 8 Steps Calulation fr Selling Price for 408( Job). 2633 19:74.75 Total lost of Job 408 Adol! Markup (9633* 75%). $ 4607.75 Machine Hours in Assembly Dept increaser fons Reco MH toShoo Since Last and Selling Price is Totoly Defadent Know -that Asseubly Departmeut we on labeur Hour fate.. Change in machike Hours does'n't effect Assawbly Departmeul .cok and salling Paice. and GOling Price for Tob 408 Yemain Same Selliny Pelce for Job 408 = $ 4607.75

(4 If la beur Hours deiseuyes 80000 DLH TO Soo00 DLH Assenbly Defardmant in Since Asseubly Departmeut Cast is deportmeut Cost s defondeul And Selling uill chuye Hour Pate o Hence Lost Labour on StePf Total Manyfackurlag audr ke d costt meling Department Assembly Defartmeut Cast $ 00,0007 375x 5000 $ s00000 + 187500 4390000 $68750o CalculatHon of Predelermined overhead fate Ste pe Assembly Defartama t over Pate Meling Departmeut overhed Pate 687500 50000 Direet Cabour Hous 2) $ 390000 6o000 Machine Hours 650 Pes machibe Hour 2) 13:75 Pes DLH. Calula te the antount of overheal appli ed for Bath Dept Step 3 to Job 408 Assen bly Dept overheaf Applied on Job fo8- milling Dept overhead Aplied on Job 408. 213.75 x40 ్రీకక - 2) bi80x be -) $ 390

SHP4 Caleulake the Job cost 408 milling Asseukly To tel Direct material Direet lost Manufauhing 8830 g133 8200 $ 680 Applied 3908550 940 3813 overhead Total Job cost to Job 408' E3783, steps Celeulation of Sel ling Price to Jab408 Total Job Aclel! margin (278 3X751) Lost 408 %$2783 Selling Price of Jab to8 $4870025 Selling Pice of Job 408 > $ 48700.25