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Predetermined Manufaturing Overhead Rates

A company has two Departments, X and Y. Manufacturing overhead is allocated based on direct labor cost in Department X and direct labor hours in Department Y. The following additional information is available:

Estimated Amounts Department X Department Y

Direct labor cost $249,600 $427,500
Direct labor hours 24,960 45,000
Manufacturing overhead costs $312,000 $256,500

Actual data for completed Job No. 140 is as follows:

Department X Department Y

Direct materials requisitioned $23,700 $48,600
Direct labor cost $34,400 $38,800
Direct labor hours 4,300 3,800

a) Compute the predetermined manufacturing overhead rate for Department X.

b) Compute the predetermined manufacturing overhead rate for Department Y.

c) What is the total manufacturing overhead cost for Job No. 140?

d) If Job No. 140 consists of 350 units of product, what is the average unit cost of this job?

Solution Preview

a. In department X the predetermined rate is based on direct labor cost
Predtermined overhead rate = Estimated overhead/Estimated direct labor cost = 312,000/249,600 = 125% of direct labor cost
b. In department Y the ...

Solution Summary

The solution explains how to calcculate the predetermined overhead rates and the cost of a job.

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