Question

EELT AaBbCd AaBbCd AaBÚCI AaBbCI AaBbc AaB AaBbccc AaBbCcl AaBbcl AaBbCcL 1 Colorful. T List Para... 11 Normal 11 No Spac... Heading 1 Title Subtitle Subtle Em.. Emphasis intense E... Styles Paragraph 25. Industrial Products Inc expects to incur $1,200,000 in manufacturing overhead costs this year. Industrial Products expects to use 15.000 direct labor hours at a cost of $192,000 and a total of 80,000 machine hours. Management of Delgado would like to evaluate the cost of Job 12 using three different approaches to allocating overhead costs. (18 Points) Required: (1) Prepare three separate predetermined overhead rates based on direct labor hours, direct labor cost and machine hours. With each of the predetermined overhead rates for Industrial Products (calculated in Requirement I), determine the cost of Job 12 using the following information Job 12: Direct materials Direct labor $3.000 40 hours at $16 per hour +8 hours at $35 per hour 150 hours Machine time

Answer 1

1)
Predetermined Overhead Rate
Based on direct labor hours = Total Overheads/number of direct labor
=$1200000/15000
=$80 per hour
Based on direct labor Cost = Total Overheads/number of direct labor
=$1200000/192000
=$6.25 per $ of direct labor cost
Based on MAchine Hourshours = Total Overheads/number of Machine Hours
=$1200000/80000
=$15 per hour
2)	Cost Of Job 12- ( Overhead allocation based on direct labor hours)
	Direct material		$        3,000
	Labor Cost		$            920
	[(40*$16)+(8*35)]
	Overhead Cost		$        3,840
	[(40+8)*$80]
	Total		$        7,760
	Cost Of Job 12- ( Overhead allocation based on direct labor cost)
	Direct material		$        3,000
	Labor Cost		$            920
	[(40*$16)+(8*35)]
	Overhead Cost		$        5,750
	($6.25*920)
	Total		$        9,670
	Cost Of Job 12- ( Overhead allocation based on Machine Hours)
	Direct material		$        3,000
	Labor Cost		$            920
	[(40*$16)+(8*35)]
	Overhead Cost		$        2,250
	(150 m hours *$15)
	Total		$        6,170