2-6 (Part Level Submission)

Custom Auto Parts manufactures parts to order for antique cars. Custom Auto Parts makes everything from fenders to engine blocks. Each customer order is treated as a job. The company currently has two jobs, Job 9823 and Job 9824, that are complete, although overhead has not yet been applied. The company wants to know what each job's cost would be under alternative overhead allocation rates based on: (1) direct labor cost, (2) direct labor hours, and (3) machine hours. Estimates for this year are as follows:

Direct labor cost$300,000Direct labor hours25,500Machine hours6,800Overhead costs$204,000

Depreciation on machinery accounts for 85 percent of the overhead costs. The job-cost sheets show:

Job 9823Job 9824Direct material$1,200$2,000Direct labor cost$1,600$1,600Direct labor hours160170Machine hours14035

(a)

Determine the overhead allocation rate under the three suggested allocation bases. (Round answers to 2 decimal places, 15.25.)

Allocation basesAmount of overheadDirect labor cost$

0.68

per labor dollar

Direct labor hours$

8

per labor hourMachine hours$

30

per machine hours

(b)

Calculate the cost of Job 9823 and Job 9824 using each of the three bases. (Round answers to 0 decimal places, e.g. 125.)

Allocation basesCost of Job 9823Cost of Job 9824Direct labor cost$

$

Direct labor hours$

$

Machine hours$

$