Determining job cost–calculation of predetermined rate for applying overhead by direct l...

Determining job cost–calculation of predetermined rate for applying overhead by direct labor cost and direct labor hour methods

Mercedes Products Inc. has its factory divided into three departments, with individual factory overhead rates for each department. In each department, all the operations are sufficiently alike for the department to be regarded as a cost center. The estimated monthly factory overhead for the departments is as follows: Forming, $64,000; Shaping, $36,000; and Finishing, $10,080. The estimated production data include the following:

Required:

Determine the cost of SL500. Assume that the factory overhead is applied to production orders, based on the following:

1. Direct labor cost

2. Direct labor hours

(Hint: You must first determine overhead rates for each department, rounding rates to the nearest cent.)