Question

Exercise 2-7 (Algo) Job-Order Costing; Working Backwards (LO2-1, LO2-2, LO2-3] Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $20.50 per hour. During the year, the company started and completed only two jobs—Job Alpha, which used 69,900 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below: Job Alpha Direct materials Direct labor Manufacturing overhead applied Total job cost ? ? ? $ 2,872,000 Job Omega Direct materials Direct labor Manufacturing overhead applied Total job cost $ 454,500 594,500 391,500 $1,440,500 Required: 1. Calculate the plantwide predetermined overhead rate. 2. Complete the job cost sheet for Job Alpha.

Answer 1

1) Omega direct labor hour = 594500/20.50 = 29000 Hour

Plantwide predetermine overhead rate = 391500/29000 = 13.50 per hour

2) Job Cost sheet for Job Alpha

	Job Alpha
Direct material	495400
Direct labor (69900*20.50)	1432950
Overhead	943650
Total	2872000