8/18/2017 exhibit 2 5jpg (1920x1080) EXHIBIT 2-5 Dickson Company: An Example Using Multiple Predetermined Overhead Rates Step 1: Calculate the estimated total manufacturing overhead cost for each department. Milling Department Overhead Cost (Y): Assembly Department Overhead Cost (Y = $390,000 + ($2.00 per MH 60,000 MHS) = $390,000 + $ 120,000 = $510,000 = $500,000 + ($3.75 per DLH 80,000 DLHs) = $500,000 + $300,000 = $800,000 Step 2: Calculate the predetermined overhead rate in each department. Milling Department Overhead Rate = 60,000 machine-hours Assembly Department Overhead Rate $510,000 $800,000 direct labor-hours = $10.00 per direct labor-hour $8.50 per machine-hour Step 3: Calculate the amount of overhead applied from both departments to Job 407 Milling Department: Overhead Applied to Job 407 Assembly Department: Overhead Applied to Job 407 = $8.50 per MH 90 MHS = $10.00 per DLH 20 DLHs = $200 = $765 Step 4: Calculate the total job cost for Job 407 Milling Assembly Total Manufacturing overhead applied Total cost of Job 407 350 965 $2,485 $765 $200 . _ _ _ . . . . Step 5: Calculate the selling price for Job 407 Total cost of Job 407..._ _ . _ . . . $2,485.00