Reference no: EM133154860

Question - Perrin Company designs industrial prototypes for outside companies. Budgeted overhead for the year was $300,000, and budgeted direct labor hours were 20,000. The average wage rate for direct labor is expected to be $30 per hour. During June, Perrin Company worked on four jobs. Data relating to these four jobs follow:

	Job 39	Job 40	Job 41	Job 42
Beginning balance	$23,200	$35,000	$16,500	$1,400
Materials requisitioned	20,500	21,800	9,200	13,600
Direct labor cost	11,600	18,900	3,850	4,500

Overhead is assigned as a percentage of direct labor cost. During June, Jobs 39 and 40 were completed; Job 39 was sold at 110 percent of cost. Job 40 is the only job in Finished Goods Inventory and will remain there until the customer accepts delivery and pays. Jobs 41 and 42 remain unfinished at the end of the month.

Required -

1. Calculate the overhead rate based on direct labor cost.

2. Set up a simple job-order cost sheet for all jobs in process during June.

3. What if the expected direct labor rate at the beginning of the year was $24 instead of $30? What would the overhead rate be? If required, round your overhead rate answer to one decimal place. How would the cost of the jobs be affected?