Asked by Enrique Cuevas on Jul 03, 2024
Verified
Doakes Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours.The company based its predetermined overhead rate for the current year on the following data: Recently, Job M843 was completed with the following characteristics: The unit product cost for Job M843 is closest to:
A) $33.75
B) $67.50
C) $27.50
D) $50.50
Predetermined Overhead Rate
A rate used to apply manufacturing overhead to products or job orders, calculated by dividing estimated overhead costs by an allocation base.
Direct Labor-Hours
The total hours worked by employees who are directly involved in the production process, used as a basis for allocating costs to products.
- Evaluate the distribution of manufacturing overhead to specific tasks and appreciate its impact on the calculation of job costs.
Verified Answer
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $510,000 ÷ 60,000 direct labor-hours = $8.50 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $8.50 per direct labor-hour × 120 direct labor-hours = $1,020
Learning Objectives
- Evaluate the distribution of manufacturing overhead to specific tasks and appreciate its impact on the calculation of job costs.
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