CG is a large manufacturer of custom hinges for kitchen cabinets . CG uses a job cost system and applies Overheads to Production on the basis of Direct labour cost. In calculating PDOH rate for 2017 the company estimated Manufacturing Overheads to be $24 Million and Direct Labour costs to be $20 million .

Actual costs incurred during 2017

Direct Material 30,000,000 During the year

Direct Labour 21,000,000 During the year

MOH chargeout @120% to each job 25,200,000 During the year

End of year Manufacturing Costs included during 2017

Insurance 500,000

Indirect Labour 7,500,000

Maintenance 1,000,000

Rent on building 11,000,000

Depreciation - equip 2,000,000

22,000,000

QUESTIONS

a On what basis does CG allocate its MOH

Calculate the PDOH rate for the current year

b. Calculate the amount of the under or over applied overhead for 2017

c. CG had the following beginning and ending balances Jan 1 2017 Dec 31 2017

WIP 5,000,000 4,000,000

FG 13,000,000 11,000,000

1 Determine COGM

2 Determine COGS

Assume that any under or overapplied be included in the COGS

d. During Job G408 was started and completed. Its cost sheet showed total cost at $1,000,000

The company prices its products at 50% above its cost. What is the price to the customer if the company follows this pricing strategy.