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) = $500,000 + ($3.75 per DLH ~ 80,000 DLHs) = $390,000 + $120,000 = $500,000 + $300,000 = $510,000 = $800,000 Step 2: Calculate the predetermined overhead rate in each department. Milling Department Overhead Rate: Assembly Department Overhead Rate: $510,000 $800,000 60,000 machine-hours 80,000 direct labor-hours = $8.50 per machine-hour = $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 Assembly Department: Overhead Applied to Job 407 = $8.50 per MH ~ 90 MHs = $10.00 per DLH ~ 20 DLHs = $765 = $200 Step 4: Calculate the total job cost for Job 407. Milling Assembly Total Direct materials $800 $370 $ 1,170 Direct labor $70 $280 350 Manufacturing overhead applied $765 $200 965 Total cost of Job 407 $2,485 Step 5: Calculate the selling price for Job 407. Total cost of Job 407 $2,485.00 Markup ($2,485 x 75%) 1,863.75 Selling price of Job 407 $4,348.75 ! Required information Chapter 2: Applying Excel This Excel worksheet relates to the Dickson Company example that is summarized in Exhibit 2-5 Chapter 2: Applying Excel: Exercise (Part 2 of 2) 2. Change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000, keeping all of the other data the same as in the original example. Consider a new job, Job 408, with the following characteristics: A B 1 Chapter 2: Applying Excel 2 Cost summary for Job 408 Department Milling Assembly 5 Machine-hours 80 3 6 Direct labor-hours 8 40 Direct materials cost $ 880 $ 490 7 Direct labor cost $ 128 $ 800 8 In your worksheet, enter this new data in the cells for Job 407. What is the new selling price for Job 408? (Round your final answer to 2 decimal places.) Selling price for Job 408 $ 5,911.50 3. Without changing the data for the job from requirement 2 above, what is the selling price for Job 408 if the total number of machine- hours in the Assembly Department increases from 3,000 machine-hours to 6,000 machine-hours? (Round your final answer to 2 decimal places.) Selling price for Job 408 $ 5,911.50 4. Restore the total number of machine-hours in the Assembly Department to 3,000 machine-hours. And keep the job data the same as it was in Requirement 2. What is the selling price for Job 408 if the total number of direct labor-hours in the Assembly Department decreases from 80,000 direct labor-hours to 50,000 direct labor-hours? (Round your final answer to 2 decimal places.) Selling price for Job 408 Markup on job cost 75% Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Milling Assembly 60,000 3,000 8,000 80,000 $390,000 $500,000 $2.00 $3.75 Cost summary for Job 407 Machine-hours Direct labor-hours Direct materials Direct labor cost Department Milling Assembly 90 4 5 20 $800 $370 $70 $280 Enter a formula into each of the cells marked with a ? below Step 1: Calculate the estimated total manufacturing overhead cost for each department Milling Total fixed manufacturing overhead cost $390,000 Variable manufacturing overhead per machine-hour or direct labor-hour $2.00 Total machine-hours or direct labor-hours 60,000 Total variable manufacturing overhead $120,000 Total manufacturing overhead $510,000 Assembly $500,000 $3.75 80,000 $300,000 $800,000 Step 2: Calculate the predetermined overhead rate in each department Total manufacturing overhead Total machine-hours or direct labor-hours Predetermined overhead rate per machine-hour or direct labor-hour Milling $510,000 60,000 $8.50 Assembly $800,000 80,000 $10.00 Step 3: Calculate the amount of overhead applied from both departments to Job 407 Predetermined overhead rate per machine-hour or direct labor-hour Machine-hours or direct labor-hours for the job Manufacturing overhead applied Milling $8.50 90 $765.00 Assembly $10.00 20 $200.00 Step 4: Calculate the total job cost for Job 407 Direct materials Direct labor cost Manufacturing overhead applied Total cost of Job 407 Milling $800.00 $70.00 $765.00 Assembly $370.00 $280.00 $200.00 Total $1,170.00 $350.00 $965.00 $2,485.00 Step 5: Calculate the selling price for Job 407 Total cost of Job 407 Markup Selling price of Job 407 2,485.00 1,864.00 4,349.00 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) = $500,000 + ($3.75 per DLH ~ 80,000 DLHs) = $390,000 + $120,000 = $500,000 + $300,000 = $510,000 = $800,000 Step 2: Calculate the predetermined overhead rate in each department. Milling Department Overhead Rate: Assembly Department Overhead Rate: $510,000 $800,000 60,000 machine-hours 80,000 direct labor-hours = $8.50 per machine-hour = $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 Assembly Department: Overhead Applied to Job 407 = $8.50 per MH ~ 90 MHs = $10.00 per DLH ~ 20 DLHs = $765 = $200 Step 4: Calculate the total job cost for Job 407. Milling Assembly Total Direct materials $800 $370 $ 1,170 Direct labor $70 $280 350 Manufacturing overhead applied $765 $200 965 Total cost of Job 407 $2,485 Step 5: Calculate the selling price for Job 407. Total cost of Job 407 $2,485.00 Markup ($2,485 x 75%) 1,863.75 Selling price of Job 407 $4,348.75 ! Required information Chapter 2: Applying Excel This Excel worksheet relates to the Dickson Company example that is summarized in Exhibit 2-5 Chapter 2: Applying Excel: Exercise (Part 2 of 2) 2. Change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000, keeping all of the other data the same as in the original example. Consider a new job, Job 408, with the following characteristics: A B 1 Chapter 2: Applying Excel 2 Cost summary for Job 408 Department Milling Assembly 5 Machine-hours 80 3 6 Direct labor-hours 8 40 Direct materials cost $ 880 $ 490 7 Direct labor cost $ 128 $ 800 8 In your worksheet, enter this new data in the cells for Job 407. What is the new selling price for Job 408? (Round your final answer to 2 decimal places.) Selling price for Job 408 $ 5,911.50 3. Without changing the data for the job from requirement 2 above, what is the selling price for Job 408 if the total number of machine- hours in the Assembly Department increases from 3,000 machine-hours to 6,000 machine-hours? (Round your final answer to 2 decimal places.) Selling price for Job 408 $ 5,911.50 4. Restore the total number of machine-hours in the Assembly Department to 3,000 machine-hours. And keep the job data the same as it was in Requirement 2. What is the selling price for Job 408 if the total number of direct labor-hours in the Assembly Department decreases from 80,000 direct labor-hours to 50,000 direct labor-hours? (Round your final answer to 2 decimal places.) Selling price for Job 408 Markup on job cost 75% Machine-hours Direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor-hour Department Milling Assembly 60,000 3,000 8,000 80,000 $390,000 $500,000 $2.00 $3.75 Cost summary for Job 407 Machine-hours Direct labor-hours Direct materials Direct labor cost Department Milling Assembly 90 4 5 20 $800 $370 $70 $280 Enter a formula into each of the cells marked with a ? below Step 1: Calculate the estimated total manufacturing overhead cost for each department Milling Total fixed manufacturing overhead cost $390,000 Variable manufacturing overhead per machine-hour or direct labor-hour $2.00 Total machine-hours or direct labor-hours 60,000 Total variable manufacturing overhead $120,000 Total manufacturing overhead $510,000 Assembly $500,000 $3.75 80,000 $300,000 $800,000 Step 2: Calculate the predetermined overhead rate in each department Total manufacturing overhead Total machine-hours or direct labor-hours Predetermined overhead rate per machine-hour or direct labor-hour Milling $510,000 60,000 $8.50 Assembly $800,000 80,000 $10.00 Step 3: Calculate the amount of overhead applied from both departments to Job 407 Predetermined overhead rate per machine-hour or direct labor-hour Machine-hours or direct labor-hours for the job Manufacturing overhead applied Milling $8.50 90 $765.00 Assembly $10.00 20 $200.00 Step 4: Calculate the total job cost for Job 407 Direct materials Direct labor cost Manufacturing overhead applied Total cost of Job 407 Milling $800.00 $70.00 $765.00 Assembly $370.00 $280.00 $200.00 Total $1,170.00 $350.00 $965.00 $2,485.00 Step 5: Calculate the selling price for Job 407 Total cost of Job 407 Markup Selling price of Job 407 2,485.00 1,864.00 4,349.00