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 (Y) = $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 Assembly Department: Overhead Applied to Job 407 = $10.00 per DLH X 20 DLHS = $200 Step 4: Calculate the total job cost for Job 407. Direct materials Direct labor Manufacturing overhead applied Total cost of Job 407 Milling S 800 S 70 $ 765 Assembly S 370 S 280 $ 200 Total S 1,170 350 965 S 2,485 Step 5: Calculate the selling price for Job 407. Total cost of Job 407 Markun (S2.485 x 75% Type here to search S 2.485.00 186375 O !! Step 1: Calculate the estimated total manufacturing overhead cost for each department Milling Department Overhead Cost (Y)= $390,000 + ($2.00 per MH 60,000 MHS) S390,000+ $120,000 = $510,000 + Assembly Department Overhead Cost (Y) = $500,000 + (S3.75 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 x 90 MHs S765 Assembly Department: Overhead Applied to Job 407 -$10.00 per DLH 20 DLHS = $200 Step 4: Calculate the total job cost for Job 407. Direct materials Direct labor Manufacturing overhead applied Total cost of Job 407 Milling S 800 $ 70 $ 765 Assembly $ 370 S 280 S 200 Total $ 1.170 350 965 $ 2.485 Step 5: Calculate the selling price for Job 407. Total cost of Job 407 Markup ($2,485 x 75%) Selling price of Job 407 S 2.485.00 1.863.75 $ 4,348.75 Tyne here to coach CH 02 Applying Excel Saved Help Save C 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 B c Chapter 2: Applying Excel 1 2 3 4 Cost summary for Job 408 5 6 Machine-hours Direct labor-hours Direct materials cost Direct labor cost Department Milling Assembly 70 4 5 20 7305 400 100 $ 360 nces 7 $ $ 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 $ 5,573.75 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 $ 5,573.75 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 4.000 machine-hours? (Round your final answer to 2 decimal places.) Solling price for Job 408 s 5,573.75 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 40,000 direct lobor hours? (Round your final answer to 2 decimal places.) Selling price for Job 40B $ 5,993.75
