Question:

Considering the industry benchmark for the overhead for assembly is 75% of direct labour cost, identify whether this specific job has an overhead for assembly lower or higher than a job using the industry benchmark. Explain what could cause a difference between this specific job and the industry benchmark for the assembly overhead cost.

Management Account Question: John- the management accountant has implemented a job-order costing system for Fridge-R-Fun using predetermined overhead rates. For this part, the focus is on two different processes in Fridges-R-Fun, namely, welding the pipes to the compressor and assembling the fridges. The predetermined overhead rate for welding is based on machine-hours and the predetermined overhead rate for assembly is based on direct labour-hours. John has compiled the following estimates for Year 1: Table 3 - Estimates for Year 1 Estimates Direct labour-hours Machine-hours Fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labour-hour Direct labour-hours Machine-hours Direct materials Direct labour cost Welding 25 The plan is to use the implemented job-order costing system for the following job: Table 4 - Job Job 40 Welding Assembly $500 $300 3,600 6,000 600 288,000 64,800 $2.00 7,200 80 Assembly 5 $1.00 $200 $800