Question

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3) Obermeyer Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 10,000 direct labor-hours, total fixed manufacturing overhead cost of $96,000, and a variable manufacturing overhead rate of $3.60 per direct labor- hour. Job A735, which was for 40 units of a custom product, was recently completed. The job cost sheet for the job contained the following data: Total direct labor-hours Direct materials Direct labor costs 200 $540 $6,400 Required: a. Calculate the amount of overhead applied to Job A735. (3 pts) b. Calculate the total job cost for Job A735(3 pts) 2 c. Calculate the unit product cost for Job A735. (3 pts) d. If the unit cost is marked up by 40% what is the price for Job A735.(3 pts)

Answer 1

Solution:

(a) Calculation of amount of overhead applied to Job A735 = Predetermined OH Rate * Direct labor hours Overhead Applied to Job A735 = $13.20 * 200 DLHS = $2,640

540 (b) Calculation of total job cost for Job A735 Direct Materials Cost Direct labor costs Manufacturing Overhead Total Job Cost $ $ $ $ 6,400 2,640 9,580 $ $ 9,580 (c) Calculation of unit product cost for Job A735 Total Job Cost (+) No. of units completed Unit Product Cost 40 $ 239.50 239.50 (d) Calculation of Price for Job A735 Unit Product Cost (+) Marked up ($239.50 * 40%) Price for Job A735 $ $ $ 95.80 335.30

Working: Calculation of Predetermined Overhead Rate = Fixed MOH cost / Estimated Direct labor hours Predetermined Fixed = $96,000 / 10,000 MOH Rate = $9.60 = Fixed MOH Cost + Variable MOH Cost Predetermined Overhead = $9.60 + $3.60 Rate = $13.20 per DLHS