The company uses a job order cost system and computes a predetermined overhead

The company uses a job order cost system and computes

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FasGrow Company has two departments, Milling and Assembly. The company uses a job- order cost system and computes a predetermined overhead rate in each department. The Milling Department bases its rate on machine-hours, and the Assembly Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Milling Assembly Direct labor-hours: 8,000 80,000 Machine-hours: 60,000 3,000 Total fixed manufacturing overhead cost: $390,000 $500,000 The variable manufacturing overhead is $2.00 per machine-hour and $3.75 per direct labor- hour. 58fdaa376fd56a812e92b0f41fbdc268573567a0.docx Page 1 of 4
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Required: Compute the predetermined overhead rate in each department. Milling TVC: 60,000 machine-hours x $2,00 = $120,000 8,000 direct labor-hours x $3.75 = $30,000 TFC: $390,000 TC: $540,000 Predetermined overhead rate: $540,000 / 60,000 machine-hours = $9 per machine-hour Assembly TVC: 80,000 direct labor-hours x $3,75 = $300,000 3,000 machine-hours x $2.00 = $6,000 $300,000 + $6,000 = $306,000 TFC: $500,000 TC: $806,000 Predetermined overhead rate: $806,000 / 80,000 direct labor-hours = $10.08 per direct labor-hour 58fdaa376fd56a812e92b0f41fbdc268573567a0.docx Page 2 of 4
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Problem 4 The following data are taken from the accounting records of Eccles Company: Direct labor cost 90,000 Raw material purchases 132,000 Manufacturing overhead applied to work in process 210,000 Inventories : Beginning of Year End of Year Raw materials $8,000 $10,000 Work in process 5,000 20,000 Finished goods 70,000 25,000 Required: 1) Prepare a schedule of cost of goods manufactured . Assume all raw materials used in
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  • Spring '20
  • Goods Sold, Supply chain management terms, FasGrow Company

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