Question

EXERCISE 3-3 Computing Job Costs [LO3–3] Mickley Company's predetermined overhead rate is $14.00 per direct labor-hour and its direct labor wage rate is $12.00 per hour. The following information pertains to Job A-500: Direct materials .. Direct labor ................ $230 $108 Required: 1. What is the total manufacturing cost assigned to Job A-500? 2. If Job A-500 consists of 40 units, what is the average cost assigned to each unit included in the job?

Answer 1

Requirement (1)-The total manufacturing cost assigned to Job A-500

Direct labor hours = Direct labor cost / Labor rate per hour

= $108 / $12 per hour

= 9 labor hours

Overhead cost = Direct labor hours x Overhead rate per labor hours

= 9 Hours x $14.00 per hour

= $126

Therefore, the total manufacturing cost assigned to Job A-500 = Direct material + Direct labor + Overhead cost

= $230 + $108 + $126

= $464

Requirement (2) – The average cost assigned to each unit included in the job

The average cost assigned to each unit included in the job = The total manufacturing cost / Number of units

= $464 / 40 units

= $11.60 per unit