Question

1. The Green Company makes boats from wood. Job 459 is to build 40 rowboats.

Job 459 requires 1,000 pounds of wood costing $8 per pound. It requires 60 hours of direct labor costing $25 per hour.

Total manufacturing overhead cost expected

          for all jobs during the whole year in the Machining department               $160,000   

Estimated machine hours for all jobs during the whole year

              in the Machining department                                                                             8,000   

Estimated direct labor hours for all jobs during the whole year

              in the Machining department                                                                          10,000  

Total manufacturing overhead cost expected

         for all jobs during the whole year in the Assembly department                 $240,000  

Estimated machine hours for all jobs during the whole year

                in the Assembly department                                                                         16,000                                  

Estimated direct labor hours for all jobs during the whole year

                 in the Assembly department                                                                        30,000   

                                     

Calculate the following if the Green Company uses a different predetermined overhead rate for each department. In the Machining department the predetermined overhead rate uses machine hours as the allocation base, while in the Assembly department the predetermined overhead rate uses direct labor hours as the allocation base:

1. The predetermined overhead rate for the Machining department
2. The predetermined overhead rate for the Assembly department
3. The direct materials cost of job 459
4. The direct labor cost of job 459
5. The manufacturing overhead cost applied to job 489 if the job uses 9 machine hours in the Machining department and 50 direct labor hours in the Assembly department
6. The total cost of job 459
7. The cost per boat

Answer 1

Abbreviations used: Machining $160,000 8,000 Assembly $240,000 Estimated overhead costs Estimated machine hours Estimated direct labor hours Predetermined overhead rate DLH --> Direct Labor Hour MH --> Machine Hour OH --> Overhead 30,000 $8 [Ref: NOTE] per DLH $20 per MH NOTE: Departmental overhead rate for Machining = $160000 / 8000 DLHs = $20 per MH; Departmental overhead rate for Assembly = $240000 / 30000 MHs = $8 per DLH. Pounds of wood costing required Price per pound of wood costing Direct materials cost of job 459 1,000 $8 $8,000 (1000 pounds x $8] 60 Direct labor hours required Rate per direct labor hour Direct labor cost of job 459 $25 $1,500 [60 hours x $25]

Machining department's OH cost assigned Assembly department's OH cost assigned Total overhead costs allocated to Job 459 $180 [9 MHs x $20] $400 (50 DLHS x $8] $580 ($180 + $400] Total cost of Job 459 Number of rowboats produced from Job 459 Cost per rowboat $10,080 ($8000 + $1500 + $580 (Direct materials cost + Direct labor cost + Overhead cost allocated)] 40 $252 [$10080 / 40 rowboats]