Chapter 5, End Of Chapter, REVIEW PROBLEMS, Exercise I
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Job Cost, Applied Overhead, Unit Cost

 

Bostian Company uses a normal job-order costing system. It processes most jobs through two departments. Selected budgeted and actual data for the past year follow. Data for one of several jobs completed during the year also follow.

Bostian Company uses a plantwide, predetermined overhead rate to assign overhead (OH) to jobs. Direct labor hours (DLH) is used to compute the predetermined overhead rate. Bostian prices its jobs at cost plus 30 percent.

 

Required:

 

Compute the predetermined overhead rate.

Job Cost, Applied Overhead, Unit Cost

 

Bostian Company uses a normal job-order costing system. It processes most jobs through two departments. Selected budgeted and actual data for the past year follow. Data for one of several jobs completed during the year also follow.

Bostian Company uses a plantwide, predetermined overhead rate to assign overhead (OH) to jobs. Direct labor hours (DLH) is used to compute the predetermined overhead rate. Bostian prices its jobs at cost plus 30 percent.

 

Required:

 

Using the predetermined rate, compute the per-unit manufacturing cost for Job 10.

Job Cost, Applied Overhead, Unit Cost

 

Bostian Company uses a normal job-order costing system. It processes most jobs through two departments. Selected budgeted and actual data for the past year follow. Data for one of several jobs completed during the year also follow.

Bostian Company uses a plantwide, predetermined overhead rate to assign overhead (OH) to jobs. Direct labor hours (DLH) is used to compute the predetermined overhead rate. Bostian prices its jobs at cost plus 30 percent.

 

Required:

 

Assume that Job 10 was completed in May and sold in September. Prepare journal entries for the completion and sale of Job 10.

Job Cost, Applied Overhead, Unit Cost

 

Bostian Company uses a normal job-order costing system. It processes most jobs through two departments. Selected budgeted and actual data for the past year follow. Data for one of several jobs completed during the year also follow.

Bostian Company uses a plantwide, predetermined overhead rate to assign overhead (OH) to jobs. Direct labor hours (DLH) is used to compute the predetermined overhead rate. Bostian prices its jobs at cost plus 30 percent.

 

Required:

 

Recalculate the unit manufacturing cost for Job 10 using departmental overhead rates. Use direct labor hours for Department A and machine hours for Department B. Does this approach provide a more accurate unit cost? Explain.

Job Cost, Applied Overhead, Unit Cost

 

Bostian Company uses a normal job-order costing system. It processes most jobs through two departments. Selected budgeted and actual data for the past year follow. Data for one of several jobs completed during the year also follow.

Bostian Company uses a plantwide, predetermined overhead rate to assign overhead (OH) to jobs. Direct labor hours (DLH) is used to compute the predetermined overhead rate. Bostian prices its jobs at cost plus 30 percent.

 

Required:

 

Assume that Job 10 was completed in May and sold in September. Using your work from Requirement 4, prepare journal entries for the completion and sale of Job 10.

Explanation

Predetermined overhead rate = Total budgeted overhead for both departments/Total budgeted direct labor hours for both departments


=(100000+500000)/(50000+10000)

= 600000/60000

=$10 per direct labor hour

Answer

Predetermined overhead rate= $10 per direct labor hour

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