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5 November, 11:09

As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.

Job 102 Job 103 Job 104

Direct materials $15,000 $33,000 $27,000

Direct labor 8,000 14,200 21,000

Overhead applied 4,000 7,100 10,500

Using the accumulated costs of the jobs, what predetermined overhead rate is used?

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  1. 5 November, 11:20
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    Job 102 = 29.69% of the Manufacturing Cost.

    Job 103 Predetermined overhead rate = 26.15%of the Manufacturing Cost.

    Job 104 Predetermined overhead rate = 35.89%of the Manufacturing Cost.

    Job 102 = 50% of direct labor Cost

    Job 103 Predetermined overhead rate 50%of direct labor Cost

    Job 104 Predetermined overhead rate = 50%of direct labor Cost

    Explanation:

    Total Manufacturing Costs

    Job 102 Job 103 Job 104

    Direct materials $15,000 $33,000 $27,000

    Direct labor 8,000 14,200 21,000

    Overhead applied 4,000 7,100 10,500

    Total $27000 54,300 58500

    Predetermined overhead rate = Overhead applied / Direct Labor Cost * 100

    Job 102 = 8000/4000 * 100 = 50% of direct labor Cost

    Job 103 Predetermined overhead rate=14200 / 7100 (100) = 50%of direct labor Cost

    Job 104 Predetermined overhead rate=21000 / 10500 (100) = 50%of direct labor Cost

    Using the accumulated costs

    Predetermined overhead rate = Overhead applied / Accumulated Costs (100

    Job 102 = 8000/27000*100 = 29.69% of the Manufacturing Cost.

    Job 103 Predetermined overhead rate=14200 / 54300 (100) = 26.15%of the Manufacturing Cost.

    Job 104 Predetermined overhead rate=21000 / 58500 (100) = 35.89%of the Manufacturing Cost.
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