Question

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production 159,000
Fixed manufacturing overhead cost $652,000
Variable manufacturing overhead cost per machine-hour $4.60

Required:
a. Compute the plantwide predetermined overhead rate.
b. During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials $370
Direct labor cost $230
Machine-hours used 34

c. Compute the total manufacturing cost assigned to Job 400.
d. If Job 400 includes 60 units, what is the unit product cost for this job

Answer 1

a.  The plantwide predetermined overhead rate is $8.7 per machine hour.

b. The Overhead applied is 296.

c.  The total manufacturing cost assigned to Job 400 is $896.

d.  The unit product cost for this job is $14.93.

Predetermined overhead rate

a. Predetermined overhead rate

Predetermined overhead rate = Variable overhead cost per machine hour + Fixed manufacturing overhead cost/Estimated machine hours

Predetermined overhead rate= 4.60 + 652,000/159,000

Predetermined overhead rate= 4.60 + 4.10

Predetermined overhead rate= $8.7 per machine hour

b. Overhead applied

Overhead applied = Actual machine hours used x  Predetermined overhead rate

Overhead applied = 34x 8.7

Overhead applied= $295.8

Overhead applied= $296 (rounded to nearest whole dollar)

c.  Total manufacturing cost assigned to Job 400.

Job cost sheet

Direct material $370

Direct labor $230

Overhead applied $296

Total manufacturing cost $896

d. Unit product cost = Total manufacturing cost/Number of units

Unit product cost = 896/60

Unit product cost = $14.93

Inconclusion the plantwide predetermined overhead rate is $8.7 per machine hour and the Overhead applied is 296.

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