Unformatted text preview: 16-2416-38 (continued)Direct materials costs and direct labor costs are the same for eachmethod, but applied overhead differs from one method to the other.Applying overhead to jobs based on DLH causes the Smith job to have$600 of overhead costs ($60 x 10 DLH) and the Calloway job to have$6,000 of overhead costs ($60 x 100 DLH). But applying overhead tojobs based on KWH causes the Smith job to have $5,500 of overhead costs($11 x 500 KWH) and the Calloway job to have $1,100 of overhead costs($11 x 100 KWH). Under this method, the total cost would be $6,700 forthe Smith job ($5,500 factory overhead + $1,000 direct materials + $200direct labor), and $6,100 for the Calloway job ($1,100 factory overhead+ $3,000 direct materials + $2,000 direct labor). Based on our currentpolicy, the selling price would be $10,720 for the Smith job ($6,700 x1.6) and $9,760 for the Calloway job ($6,100 x 1.6).1....
View Full Document
- Fall '07