com/Media/Connect Production/bne/accounting/garrison 17e/Applying Excel/Exhibit_2_5.png 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) = $390,000+($2.00 per MH x 60,000 MHs) = $390,000+ $120,000 = $510,000 Assembly Department Overhead Cost (M) = $500,000+ ($3.75 per DLH x 80,000 DLHs) =$500,000+ $300,000 = $800,000 Step 2: Calculate the predetermined overhead rate in each department. = Milling Department Overhead Rate: $510,000 60,000 machine-hours = $8.50 per machine-hour Assembly Department Overhead Rate: $800,000 80,000 direct labor-hours = $10.00 per direct labor-hour Step 3. Calculate the amount of overhead applied from both departments to Job 407 Milling Department Overhead Applied to Job 407 = $8.50 per MH 90 MHs = $765 Step 4: Calculate the total job cost for Job 407 Assembly Department Overhead Applied to Job 407 $10.00 per DLH-20 DLHS = $200 Direct materials Direct labor Manufacturing overhead applied Total cost of Job 407 Step 5 Calculate the selling price for Job 407 Milling Assembly Total $800 $370 $ 1,170 $70 $280 350 $765 $200 965 $2.485 Total cost of Job 407 Markup ($2.485-75%) Selling price of Job 407 $2,485 00 1863.75 $4.348 75