Assume a company started and completed numerous jobs during July—two of which were Job Y and Job Z. The company uses two departmental predetermined overhead rates. The rate in the Machining Department is based on machine-hours and the rate in the Assembly Department is based on direct labor-hours. The following additional information from the month of July is available for the company as a whole and for Jobs Y and Z: Machining Assembly Estimated total fixed manufacturing overhead $ 48,000 $ 30,000 Estimated variable manufacturing overhead per machine-hour $ 1.50 Estimated variable manufacturing overhead per direct labor-hour $ 2.00 Estimated total machine-hours to be used 12,000 Estimated total direct labor hours to be worked 10,000
Assume a company started and completed numerous jobs during July—two of which were Job Y and Job Z. The company uses two departmental predetermined
Machining | Assembly | |
---|---|---|
Estimated total fixed manufacturing overhead | $ 48,000 | $ 30,000 |
Estimated variable manufacturing overhead per machine-hour | $ 1.50 | |
Estimated variable manufacturing overhead per direct labor-hour | $ 2.00 | |
Estimated total machine-hours to be used | 12,000 | |
Estimated total direct labor hours to be worked | 10,000 |
Machining | Assembly | |
---|---|---|
Job Y | ||
Machine-hours | 43 | |
Direct labor-hours | 30 | |
Job Z | ||
Machine-hours | 40 | |
Direct labor-hours | 60 |
How much manufacturing overhead is applied from the Machining Department to Job Y?
Machine Hour rate = Here a machine is identified as a cost center. All related expenses are collected and summarize and effective machine hour rate is calculated.
Machine Hour Rate = Total overhead related to machine / Effective machine hour.
Job Costing - It is a method of costing which is used when job work is done. here we have to applied the pre-determined rate over a particular job
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