Question

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 $12.00 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 65,100 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 ? $ 1,632,000 Job Omega Direct materials Direct labor Manufacturing overhead applied Total job cost $ 195,400 326,400 136,000 $ 657,800 Required: 1. Calculate the plantwide predetermined overhead rate. 2. Complete the job cost sheet for Job Alpha.

Answer 1

Ans 1 Direct labor cost of Omega Direct labor cost per hour Total labor hours of Omega 326400 12 27200 326400/12 Manufacturing OH of Omega Labor hours Overhead rate 136000 27200 5 136000/27200 Predetermined overhead rate = $5 per direct labor hours Ans 2 Job cost sheet of Alpha Direct labor cost Manufacturing overheads 781200 65100*12 325500 65100*5 Direct materials Direct labor cost Manufacturing overheads Total 525300 (Balancing figure) 781200 325500 1632000

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