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Section 5

The document provides cost information for a small textile manufacturer and a specific job order for band jackets. It includes direct material, direct labor, and manufacturing overhead costs for the company and the job. It then provides questions to calculate the overhead rate, overhead allocated to the job, and total job costs.

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Wael chehata
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27 views2 pages

Section 5

The document provides cost information for a small textile manufacturer and a specific job order for band jackets. It includes direct material, direct labor, and manufacturing overhead costs for the company and the job. It then provides questions to calculate the overhead rate, overhead allocated to the job, and total job costs.

Uploaded by

Wael chehata
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Comfort Manufacturing is a small textile manufacturer using machine-


hours as the single indirect-cost rate to allocate manufacturing overhead
costs to the various jobs contracted during the year. The following
estimates are provided for the coming year for the company and for the
Winton High School band jacket job.
Company Winton High School Job
Direct materials $40,000 $2,000
Direct labor $10,000 $400
Manufacturing overhead costs $45,000
Machine-hours 100,000 mh 900 mh

 For Comfort Manufacturing, what is the annual manufacturing overhead


cost-allocation rate?
A) $0.50
B) $0.80
C) $0.45
D) $33.33
$45,000/100,000 mh = $0.45 per mh

 What amount of manufacturing overhead costs will be allocated to this


job?
A) $405
B) $425
C) $270
D) $465
900 mh × $45,000 / 100,000 mh = $405

 What are the total manufacturing costs of this job?


A) $1,970
B) $2,805
C) $2,905
D) $1,920
DM $2,000 + DML $400 + MOH $405 = $2,805
Exercise 2:
Chiphard Works collects its costs data using job-order cost system. For job
123, the following data are available:
Direct Materials Direct Labor

7/14 Issued $1,200 Week of July20 180 hours@$6.50


7/20 Issued 650 Week of July 26 140 hours@$7.25
7/25 Issued 350
$2,200

Factory overhead is applied at the rate of $4.50 per direct labor hour

Compute:

a) the cost of Job 123

Solution
The cost of the job is
Direct material $2,200
Direct labor
180 hours X $6.50 = 1,170
140 hours X $7.25 = 1,015 2,185
Factory overhead
320 hours X $4.50 1,440
Cost of job 123 $5,825

Exercise 3

Forge Machine Works collects its cost data by the job order cost accumulation procedure.
The company uses direct labor hours as the allocation base. For Job 642, the following data
are available, the following data are available:

Direct Materials Direct Labor


9/14 $1,200 Week of Sept.20 180 hrs@$6.20/hr
9/20 662 Week of Sept.26 140 hrs@$7.30/hr
9/22 480
The estimated total manufacturing overhead is 525,000 and the estimated direct labor hours is
150,000.

Required: calculate the cost of Job 642

Solution
DM = 1,200 + 662 + 480 = 2,342
DL = (180 X 6.20) + (140 X 7.30) = 2,138
Applied OH = 1,120
Total cost = $5,600

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