Question

Pritchet Computer Company uses a job order costing system in which each batch manufactured is a different job. Pritchet Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $22 per hour. It allocates manufacturing overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2020, the controller prepared the following budget: (Click the icon to view the budget.) In November 2020, Pritchet Computer Company worked on several jobs. Records for two jobs appear here: (Click the icon to view the records for the two jobs.) Read the requirements. Data Table 2020- Data Table X Job 721 Manufacturing overhead Job 722 50 hours 2,000 $ $ Direct labor hours Direct materials 210,000 1,050,000 850 hours 20,200 $ $ Direct labor costs Print Done Print Done

Answer 1

Requirement-1 Predetermined overhead rate Estimated manufacturing overhead / Estimated labour cost = $ 210,000 / $ 1,050,000 Predetermined overhead rate 20% Requirement -2 Particulars Direct Material consumed Direct labour Overhead applied Total Cost Job-721 Job-722 $ 20,200 $ $ 18,700 3,740 $ 42,640 S Total 2,000 $ 22,200 1,100 $ 19,800 A (Labour hours * Labour cost per hour ($24)) 220 $ 3,960 A*20% 3,320 S 45,960 Pritchet computer company assigns costs to jobs to help the company to set sales prices that covers all costs and contribute to profit. Assigning costs to Individual jobs also can help Pritchet control costs