Please Help!!!! Trying to get a little help on working this accounting problem. Please help...
Jawed enterprises uses a job-order costing system and a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated manufacturing overhead for the year would be $3,600,000 and machine hours would be 18,000.
The following information pertains to December of the current year:
Job 10 Job 11 Job 12 Total
Work-in-process, Dec. 1 $106,000 $206,000 $308,000 $620,000
December production activity:
Materials requisitioned $400,000 $400,800 $407,200 $1, 208,000
Direct labor cost $26,400 $38,600 $40,000 $105,000
Machine hours 4,000 7,000 9.000 20,000
Actual manufacturing overhead cost incurred in December was $61,000.
Required:
a. Compute the predetermined overhead application rate.**
b. Determine the total cost associated with each job.
a. To compute the predetermined overhead application rate, you need to divide the estimated manufacturing overhead for the year by the estimated machine hours.
Predetermined Overhead Application Rate = Estimated Manufacturing Overhead / Estimated Machine Hours
Given:
Estimated Manufacturing Overhead = $3,600,000
Estimated Machine Hours = 18,000
So, the Predetermined Overhead Application Rate = $3,600,000 / 18,000 = $200 per machine hour.
b. To determine the total cost associated with each job, you need to calculate the overhead applied to each job and add it to the respective direct costs (materials and direct labor) for each job.
Step 1: Calculate the overhead applied to each job.
Overhead Applied = Predetermined Overhead Application Rate * Actual Machine Hours
For Job 10:
Overhead Applied for Job 10 = $200/machine hour * 4,000 machine hours = $800,000
For Job 11:
Overhead Applied for Job 11 = $200/machine hour * 7,000 machine hours = $1,400,000
For Job 12:
Overhead Applied for Job 12 = $200/machine hour * 9,000 machine hours = $1,800,000
Step 2: Calculate the total cost associated with each job.
Total Cost for each job = Materials Cost + Direct Labor Cost + Overhead Applied
For Job 10:
Total Cost for Job 10 = $400,000 (Materials Requisitioned) + $26,400 (Direct Labor Cost) + $800,000 (Overhead Applied) = $1,226,400
For Job 11:
Total Cost for Job 11 = $400,800 (Materials Requisitioned) + $38,600 (Direct Labor Cost) + $1,400,000 (Overhead Applied) = $1,839,400
For Job 12:
Total Cost for Job 12 = $407,200 (Materials Requisitioned) + $40,000 (Direct Labor Cost) + $1,800,000 (Overhead Applied) = $2,247,200
So, the total cost associated with each job is:
Job 10: $1,226,400
Job 11: $1,839,400
Job 12: $2,247,200