Question

Plantwide Overhead Rate, Activity-Based Costing, Job Costs

Answer 1

Answer:

Foto-FAst Copy Shop

1. Predetermined overhead rate = $4 per direct labor hour

2. Predetermined overhead rate = $11 per direct labor hour

3. Total job cost (Rick Anselm):

May 20 = $26.00

June 20 = $30.00

4. The two overhead rates:

a. $26.40 per machine hour

b. $3.71 per direct labor hour

Explanation:

a) Data and Calculations:

Average overhead per year prior to the purchase of the new equipment = $30,400

Average overhead per year after the installation of new equipment = $83,600

Budgeted direct labor hours for the year = 7,600

Wage rate = $9 per hour

1. Predetermined overhead rate prior to the purchase of the new equipment

= $4 ($30,400/7,600)

2. Predetermined overhead rate after the new equipment was purchased

= $11 ($83,600/7,600)

3. Cost of Rick Anselm's job on May 20:

Materials ($0.03 * 600) $18.00

Labor ($9 * 36/60)            5.40

Overhead applied            2.40 ($4 * 36/60)

Total cost of job =        $25.80 = $26

Cost of Rick Anselm's job on June 20:

Materials ($0.03 * 600) $18.00

Labor ($9 * 36/60)            5.40

Overhead applied            6.60 ($11 * 36/60)

Total cost of job =        $30.00

4. Overhead Rates         Photocopying     Computer Printing   Total

Overhead cost                   $55,440                $28,160              $83,600

Machine hours                       2,100

Direct labor hours                                               7,600

Overhead rates                  $26.40                     $3.71