Question
Crandall Corporation makes portable enclosures for festivals, concerts, and other events. Its products aren't mass producedeach unit is made to customer specifications. Crandall employs a
Crandall Corporation makes portable enclosures for festivals, concerts, and other events. Its products aren't mass producedeach unit is made to customer specifications. Crandall employs a normal job costing system. Direct labor at the company is compensated at a rate of $21 per hour; however, employees receive no pay when they aren't working on jobs. A predetermined rate based on direct labor-hours is used to assign manufacturing overhead to jobs. In the past two years, the company incurred manufacturing overhead costs (adjusted for price-level changes using current prices and wage rates) as follows: Year 1 Year 2 Direct labor-hours worked 144,000 118,000 Manufacturing overhead costs incurred: Indirect labor $4,580,000 $5,603,340 Employee benefits 2,204,000 3,134,000 Supplies 858,000 1,367,400 Power 620,000 987,420 Heat and light 244,000 210,870 Supervision 598,000 721,970 Depreciation 2,370,000 2,370,000 Property taxes and insurance 945,000 945,000 Total manufacturing overhead costs $12,419,000 $15,340,000
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