Question

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,170,000 in manufacturing overhead cost at an activity level of 556,000 machine-hours. The company spent the entire month of January working on a large order for 8,900 custom made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials requisitioned for production, $263,000 (80% direct and 20% indirect). b. Labor cost incurred in the factory, $171,000, of which $57,000 was direct labor and $114,000 was indirect labor. c. Depreciation recorded on factory equipment, $63,100. d. Other manufacturing overhead costs incurred, $84,600. e. Manufacturing overhead cost was applied to production on the basis of 40,930 machine-hours actually worked during the month. f. The completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.)

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur $4,170,000 in manufacturing overhead cost at an activity level of 556,000 machine-hours. The company spent the entire month of January working on a large order for 8,900 custom made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials requisitioned for production, $263,000 (80% direct and 20% indirect). b.Labor cost incurred in the factory, $171,000, of which $57,000 was direct labor and $114,000 was indirect labor. c. Depreciation recorded on factory equipment, $63,100. d. Other manufacturing overhead costs incurred, $84,600. e. Manufacturing overhead cost was applied to production on the basis of 40,930 machine-hours actually worked during the month. f. The completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.)

Answer 1

1)	Actual Manufacturing overhead cost incurred
	Indirect materials					52600
	Indirect labor					114,000
	Depreciation					63,100
	other overhead					84,600
	Actual Manufacturing overhead cost incurred					314,300
2)	Manufacturing overhead applied to production					306975
	(4,170,000/556000)*40930
3)	Total manufacturing cost for the job completed in Jan
	Direct materials					210400
	Direct labor					57,000
	overhead applied					306975
	Total manufacturing cost for the job completed in Jan					574375
4)	Unit product cost					64.54	per unit