Question
Dickson Company has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate (POHR) in each
Dickson Company has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate (POHR) in each production department. The POHR in the Milling Department is based on machine-hours and in the Assembly Department it is based on direct labor-hours. The company uses cost-plus pricing (and a markup percentage of 60% of total manufacturing cost) to establish selling prices for all of its jobs. At the beginning of the year, the company made the following estimates:
1. Calculate the POHR for each Department:(Already answered below)
Milling Department:
[(50000*3) + 390,000]/(5000) = 10.8
Assembly Department:
[(80000*3.25)+500,000)]/(80000) = 9.5
2. During the current month the company started and completed Job 407. Use the POHRs calculated above and the additional information below to determine the overhead applied from each department to Job 407, and (thus) the total MOH applied to Job 407. (Already answered below)
Milling department overhead applied:
POHR * actual value
10.8 * 50000 = 540,000
Assembly department overhead applied:
9.5*30000 = 285,000
Total MOH applied:
540,000+285,000 = 825,000
3. Now calculate the total product cost for Job 407. (CALCULATE AND SHOW WORK)
Machine Hours Direct Labor Hours Total fixed MOH cost Variable MOH per machine-hour Variable MOH per direct labor-hour Department Milling Assembly 50000 3000 8000 80000 390,000 $ 500,000 3.00 3.25 Machine Hours Direct Labor Hours Direct Materials Direct Labor Cost Department Milling Assembly 70 4 5 20 800 $ 370 280 $ $Step by Step Solution
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