Question

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 $ 8,130,000 $ 4,878,000 $ 0.25 Required: 1. Compute the predetermined overhead rate. 2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs: Direct materials Direct labor cost $ 1,286,000 $ 2,439,000

Answer 1

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A B C D E 1 N 3 4 5 5 6 Calculation of predetermined overhead rate Variable overhead cost per direct labor-dollar Fixed overhead Direct labor-dollars Fixed overhead cost per direct labor-dollar Total Amount Rate 0.25 4878000 8130000 0.6 7 00 0.85 9 10 Amount 11 1286000 12 Calculation of total cost Direct materials Direct labor cost Manufacturing overhead Total cost 2439000 13 2073150 14 5798150 15 16

For calculation ref:

А B C D 1 2 3 Amount Rate 0.25 st 5 5 5 Calculation of predetermined overhead rate Variable overhead cost per direct labor-dollar Fixed overhead Direct labor-dollars Fixed overhead cost per direct labor-dollar Total 4878000 8130000 7 =C5/C6 =SUM(D4:07) 00 9 10 Amount 11 Calculation of total cost Direct materials Direct labor cost Manufacturing overhead Total cost 1286000 2439000 12 13 1=C12*D8 =SUM(C11C13) 14 15.