Question

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,177,500 in manufacturing overhead cost at an activity level of 557,000 machine-hours. The company spent the entire month of January working on a large order for 8,400 custom made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials requisitioned for production, $257,000 (80% direct and 20% indirect). b. Labor cost incurred in the factory, $153,000, of which $51,000 was direct labor and $102,000 was indirect labor. c. Depreciation recorded on factory equipment, $63,500. d. Other manufacturing overhead costs incurred, $84,300. e. Manufacturing overhead cost was applied to production on the basis of 40,560 machine-hours actually worked during the month. f. The completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.) Required:

1. Calculate the Actual Manufacturing Overhead Costs Incurred.

2. Compute the amount of Manufacturing Overhead Applied to Production.

3. Calculate the total Manufacturing Cost for the job completed in January. .

4.Compute the unit product cost that will appear on the job cost sheet. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

1)	Actual Manufacturing overhead cost incurred
	Indirect materials					51400
	Indirect labor					102,000
	Depreciation					63,500
	other overhead					84,300
	Actual Manufacturing overhead cost incurred					301,200
2)	Manufacturing overhead applied to production					304200
	(4,177500/557000)*40,560
3)	Total manufacturing cost for the job completed in Jan
	Direct materials					205600
	Direct labor					51,000
	overhead applied					304200
	Total manufacturing cost for the job completed in Jan					560800
4)	Unit product cost					66.76	per unit