Question 1

Saga Company uses a normal job order costing system. There are two departments, spraying and finishing, which most jobs pass. Selected budgeted and actual data from the past year are as follow:

Spraying. Finishing TOTAL

Budgeted overhead. 165,000 500,000 665,000

Actual Overhead 110,000 520,000 630,000 Budgeted machine hrs 12,500 37,500 50,000

Actual machine hrs 11,000 30,000 51,000

During the year, several jobs were completed. Data pertaining to Job 123 are as follow:

Units produced 10,000 units

Direct material cost: 365,000

Direct labour cost:

Spraying (2,500 hrs@ 6 per hr) 15,000

Finishing (200 hrs @6per hr) 1,200

Machine hour used:

Spraying 500 hr

Finishing 600 hr

You are required to

a.

Compute the single predetermined overhead rate based on machine hours

.

b.

Using the single predetermined rate from (a), compute the unit manufacturing cost for Job 123

.

c.

Compute the departmental overhead rate based on machine

hours.

d.

Using the departmental overhead rate from (c), compute the unit manufacturing cost for Job 123using departmental overhead rates.