UCF-ACG2071 Ch. 3 Job Costing - Example#1 . . Estimates...

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Chapter 3 Job Costing - Solutions Example #1 Feet Company makes boots.  This company is currently trying to choose the best method of allocating manufacturing overhead to boots produced.   Here is some information from the Feet Co. Accounting Department: Estimates: Sales $1,000,000 (10,000 pairs of boots) Direct Materials $300,000 Direct Labor $150,000 (10,000 hours) Overhead $100,000 Net Profit on Boots $450,000 Estimated Machine Hours   15,000 A. Compute a predetermined overhead rate for Feet Co. using Direct labor hours as the allocation base. $100,000 / 10,000 hours = $10 per hour B. Compute a predetermined overhead rate for Feet Co. using Direct labor dollars as the allocation base. $100,000 /$ 150,000 = 67% C. Compute a predetermined overhead rate for Feet Co. using machine hours as the allocation base. $100,000 / 15,000 hours = $6.67 D. If actual labor cost was $170,000 for 10,500 direct labor hours, and actual machine hours used were 18,500, what would be the  applied overhead if: 1. The direct labor hours are used as a base?  $10 X 10,500 hours = $105,000 2. The direct labor dollars are used as a base? $170,000 X 67% = $113,900 3. The machine hours are used as a base? 18,500 hours X $6.67 = $123,395 E. If actual overhead is $115,000, what is the amount of under or over-applied overhead if: 1. The direct labor hours are used as a base? $115,000 - $105,000 = $10,000  underapplied 2. The direct labor dollars are used as a base? $115,000 - $113,900 = $1100  underapplied 3. The machine hours are used as a base? $115,000 - $123,395 = $8395  overapplied Example #2  1
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Wheeled Coach, Inc. manufactures custom-designed emergency vehicles such as ambulances and fire trucks.  Wheeled Coach expects to incur  $664,000 of manufacturing overhead cost, 41,500 of direct labor hours, and $870,000 of direct labor cost during the year (the cost of direct labor  is $24 per hour).  The company allocates manufacturing overhead on the basis of direct labor hours.  During December, Wheeled Coach completed  Job 309.  The job used 190 direct labor hours and required $15,100 of direct materials.  Wheeled cost customarily prices their vehicles at 22% over  job cost for the vehicle. Requirements:  Calculate the cost of Job 309.  Then determine the price for the vehicle built on Job 309. Req. 1 Calculate the manufacturing cost of Job 309. First identify the formula, then calculate the predetermined overhead rate. Predetermined manufacturing = $664,000 overhead rate 41,500 direct labor hours =   $16 per direct labor hour Calculate the manufacturing cost of Job 309.     Job #309  Direct materials $15,100 Direct labor  (190 direct labor hours  ×  $24 per hour) 4,560 Manufacturing overhead  (190 direct labor hours  ×  $16 per hour)          3,040 Total job cost  $22,700   Req. 2      Job #309  Total job cost  $22,700 22% markup     ×   122 % Total price to charge $27,694
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