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1 January, 04:18

Lezo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on 40,000 machine-hours, total fixed manufacturing overhead cost of $136,000, and a variable manufacturing overhead rate of $2.90 per machine-hour. Job A290, which was for 60 units of a custom product, was recently completed. The job cost sheet for the job contained the following dа ta:

Total machine-hours 300

Direct materials $585

Direct labor cost $7,200

Required:

A) Calculate the estimated total manufacturing overhead for the year.

B) Calculate the predetermined overhead rate for the year.

C) Calculate the amount of overhead applied to Job A290.

D) Calculate the total job cost for Job A290.

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Answers (1)
  1. 1 January, 07:29
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    A) Total manufacturing overhead $ 252000

    B) Predetermined overhead rate for the year $ 6.3 per machine hour

    C) Amount of overhead applied to Job A290 $ 1890

    D) Total Job Cost $ 9675

    Explanation:

    Lezo Corporation

    The total manufacturing overhead consists of Fixed overheads and variable overhead and we add them to get the total overheads.

    A) Estimated total manufacturing overhead for the year

    Fixed manufacturing overhead = $136,000

    Variable manufacturing overhead = Rate * (Machine hours) = $2.90 * 40,000

    = $116000

    Total manufacturing overhead = Fixed manufacturing overhead + Variable manufacturing overhead = $136,000+$116000=$ 252000

    B) Predetermined overhead rate for the year

    = Total manufacturing overhead/Machine hours

    = $ 252000/40,000 = $ 6.3 per machine hour

    The machine hours for the year are given = 40,000

    C) Amount of overhead applied to Job A290

    = Predetermined overhead rate * Machine hours

    = 6.3 * 300 = $ 1890

    The machine hours for the job A290 are given = 300

    D) Total job cost for Job A290

    We add the D. Materials, D. Labor and Overhead Applied to get the total job cost.

    Direct materials $585

    Direct labor cost $7,200

    Overhead Applied = $ 1890

    Total Job Cost $ 9675
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