Question

Exercise 2-14 (Algo) 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 Fixed overhead cost Variable overhead cost per direct labor-dollar $7,300,000 $ 4,380,000 $ 0.06

Answer 1

Answer:
1)
Predetermined Overhead rate             =   (Estimated Fixed Overhead Cost / DL - dollars ) + Variable overhead Cost per DLH             =    ( $ 4,380,000 / $ 7,300,000 ) + $ 0.06             =      $ 0.6 + $ 0.06             =      $ 0.66 per DLH
2)
Particulars	Amount (in $ )
Direct materials	$ 1,412,000
Direct labor	$ 2,190,000
Overhead applied ( $ 0.66 x $ 2,190,000 )	$ 1,445,400
Total Job cost	$ 5,047,400