Question

Exercise 2-14 Job-Order Costing for a Service Company [LO2-1, LO2-2, LO2-3] Yancey Productions is a film studio that uses a job-order costing system. The company’s direct materials consist of items such as costumes and props. Its direct labor includes each film’s actors, directors, and extras. The company’s overhead costs include items such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor-dollars. At the beginning of the year, Yancey made the following estimates: Direct labor-dollars to support all productions $ 8,410,000 Fixed overhead cost $ 5,046,000 Variable overhead cost per direct labor-dollar $ 0.20 Required: 1. Compute the predetermined overhead rate. 2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs: Direct materials $ 1,316,000 Direct labor cost $ 2,523,000 Compute the total job cost for this particular film.

Compute the predetermined overhead rate. (Round your answer to 2 decimal places.)

	Predetermined overhead rate per DL$

Compute the total job cost for this particular film. (Round your intermediate calculations to 2 decimal places.)

	Direct materials Direct labor Overhead applied Total job cost

Answer 1

Predetermined overhead rate = Fixed overhead rate + Variable overhead rate
= Fixed overhead cost/Direct labor cost + 0.20

= 5,046,000/8,410,000 + 0.20

= $0.80 per DL$

Total cost is as follows:
Direct Material	1,316,000
Direct Labor	2,523,000
Overhead applied = Labor cost*0.80	2,018,400
Total job cost	5,857,400