In December 2014, Learer Companys manager estimated next years total direct labor cost assuming 40 persons working
Question:
In December 2014, Learer Companys manager estimated next years total direct labor cost assuming 40 persons working an average of 2,000 hours each at an average wage rate of $40 per hour. The manager also estimated the following manufacturing overhead costs for year 2015. |
Indirect labor | $ | 324,200 | |
Factory supervision | 355,000 | ||
Rent on factory building | 145,000 | ||
Factory utilities | 93,000 | ||
Factory insurance expired | 73,000 | ||
DepreciationFactory equipment | 750,000 | ||
Repairs expenseFactory equipment | 65,000 | ||
Factory supplies used | 73,800 | ||
Miscellaneous production costs | 41,000 | ||
Total estimated overhead costs | $ | 1,920,000 | |
At the end of 2015, records show the company incurred $1,575,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $609,000; Job 202, $568,000; Job 203, $303,000; Job 204, $721,000; and Job 205, $319,000. In addition, Job 206 is in process at the end of 2015 and had been charged $22,000 for direct labor. No jobs were in process at the end of 2014. The companys predetermined overhead rate is based on direct labor cost. |
Required | ||||
1. | a. Determine the predetermined overhead rate for year 2015. | |||
2.
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