What Was the Company’s Plantwide Predetermined Overhead Rate

Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 34,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $507,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $676,606 and its actual total direct labor was 34,500 hours. Required: Compute the company’s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.) Explanation The estimated total manufacturing overhead cost is computed as follows: Y = $507,000 + ($3.00 per DLH)(34,000 DLHs) Estimated fixed manufacturing overhead Estimated variable manufacturing overhead: $3.00 per DLH × 34,000 DLHs Estimated total manufacturing overhead cost $507,000 102,000 $609,000 The plantwide predetermined overhead rate is computed as follows: Estimated total manufacturing overhead (a) Estimated total direct labor hours (b) Predetermined overhead rate (a) ÷ (b) $609,000 34,000 DLHs per $ 17.91 DLH Luthan Company uses a plantwide predetermined overhead rate of $22.60 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $271,200 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $266,000 and 12,800 total direct labor-hours during the period. Required: Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period. Explanation Actual direct labor-hours (a) Predetermined overhead rate (b) Manufacturing overhead applied (a) × (b) 12,800 $ 22.60 $289,280 Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $21.00 per direct labor-hour and $17.00 per direct labor-hour, respectively. The company’s direct labor wage rate is $23.00 per hour. The following information pertains to Job N-60: Assembly Direct materials Direct labor $ 385 $ 207 Testing & Packaging $ 43 $ 115 Required: 1. What is the total manufacturing cost assigned to Job N-60? (Do not round intermediate calculations.) 2. If Job N-60 consists of 10 units, what is the unit product cost for this job? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Rechecks 2017-08-08 Garrison_16e_Rechecks_2019_10_02 Explanation 1 & 2. The total direct labor-hours required for Job N-60: Direct labor cost (a) Direct labor wage rate per hour (b) Total direct labor hours (a) ÷ (b) Testing & Packaging Assembly $ 207 $ $ 115 23 $ 9 23 5 The total manufacturing cost and unit product cost for Job N-60 is computed as follows: Direct materials ($385 + $43) Direct labor ($207 + $115) Assembly Department ($21 per DLH × 9 DLHs) Testing & Packaging Department ($17 per DLH × 5 DLHs) Total manufacturing cost Total manufacturing cost (a) Number of units in the job (b) Unit product cost (a) ÷ (b) $ 428 322 $189.00 85.00 $ 1,024 274 $ 1,024 10 $102.40 Mickley Company’s plantwide predetermined overhead rate is $20.00 per direct labor-hour and its direct labor wage rate is $14.00 per hour. The following information pertains to Job A-500: Direct materials Direct labor $220 $280 Required: 1. What is the total manufacturing cost assigned to Job A-500? 2. If Job A-500 consists of 80 units, what is the unit product cost for this job? (Round your answer to 2 decimal places.) Explanation 1.Total direct labor-hours required for Job A-500: Direct labor cost (a) Direct labor wage rate per hour (b) Total direct labor hours (a) ÷ (b) $280 $ 14 20 Total manufacturing cost assigned to Job A-500: Direct materials Direct labor Manufacturing overhead applied($20 perDLH × 20DLHs) Total manufacturing cost 2.Unit product cost for Job A-500: Total manufacturing cost (a) $ 900 $ 400 $ 220 280 900 Number of units in the job (b) 80 Unit product cost (a) ÷ (b) $ 11.25 Braverman Company has two manufacturing departments—Finishing and Fabrication. The predetermined overhead rates in Finishing and Fabrication are $15.00 per direct labor-hour and 120% of direct materials cost, respectively. The company’s direct labor wage rate is $22.00 per hour. The following information pertains to Job 700: Direct materials Direct labor Finishing Fabrication $440 $ 65 $242 $154 Required: 1. What is the total manufacturing cost assigned to Job 700? 2. If Job 700 consists of 30 units, what is the unit product cost for this job? (Round your answer to 2 decimal places.) Explanation 1 & 2. The total direct labor-hours required in Finishing for Job 700: Finishing Direct labor cost (a) Direct labor wage rate per hour (b) Total direct labor hours (a) ÷ (b) $ 22 11 $242 The total manufacturing cost and unit product cost for Job 700 is computed as follows: Direct materials ($440 + $65) Direct labor ($242 + $154) Finishing Department ($15 per DLH × 11 DLHs) Fabrication Department (120% × $65) Total manufacturing cost Total manufacturing cost (a) Number of units in the job (b) Unit product cost (rounded) (a) ÷ (b) $ 505 396 $165 78 243 $1,144 $1,144 30 $38.13 Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm’s direct labor includes salaries of consultants that work at the client’s job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 57,500 direct laborhours would be required for the period’s estimated level of client service. The company also estimated $345,000 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm’s actual overhead cost for the year was $365,300 and its actual total direct labor was 64,000 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job: Direct materials Direct labor cost Direct labor hours worked $38,700 $26,400 230 Compute the total job cost for the Xavier Company engagement. Garrison 16e Rechecks 2017-06-1 2017-08-08 Explanation 1. The estimated total overhead cost is computed as follows: Y = $345,000 + ($0.50 per DLH)(57,500 DLHs) Estimated fixed overhead cost Estimated variable overhead cost: $0.50 per DLH × 57,500 DLHs $345,000 28,750 Estimated total overhead cost $373,750 The predetermined overhead rate is computed as follows: Estimated total overhead (a) Estimated total direct labor-hours (b) Predetermined overhead rate (a) ÷ (b) $373,750 2.Overhead applied ($6.50 per DLH × 230 DLHs) = $1,495 57,500 DLHs $ 6.50 per DLH