Question

Yancey Productions is a film studio that uses a job-order costing system. The company's direct materials consist of items such as costumes and props. Its direct labor includes each film's actors, directors, and extras. The company's overhead costs include items such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor-dollars At the beginning of the year, Yancey made the following estimates: Direct labor-dollars to support all productions Fixed overhead cost Variable overhead cost per direct labor dollar $8,640,000 $5,184,0ee $0,21 Required: 1. Compute the predetermined overhead rate 2. During the year, Yancey produced a film titied You Can Say That Again that incurred the following costs Direct materials Direct labor cost $1,350,00e $2,592,000

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Yancey applies its overhead cost to films based on direct labor-dollars.

At the beginning of the year, Yancey made the following estimates:

Direct labor dollars= 8,640,000

Fixed overhead cost= 5,184

Variable overhead cost per direct labor dollar= $0,21

To calculate the predetermined overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 5,184/8,640,000 + 0.21= 0.0006 + 0.21= $0.2106 per direct labor dollar

Now, we can calculate the allocated overhead for You Can Say That Again:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 0.2106*2,592,000= $545,875.2