Reference no: EM13921013

Part 2
Peter Coffin and Paul Bearer own The Grave Undertaking, Inc. and their firm uses a predetermined overhead rate to apply overhead to the production of custom-built coffins. They use a job order cost system. Overhead is applied on the basis of labor hours in Dept. A and on the basis of machine hours in Dept. B. At the start of the year the company made the following budgets for the year's activity:

                                 Dept. A               Dept. B
Direct Material Cost        $120,000             $150,000
Total Product Cost            280,000             395,000
Direct labor Cost                   ????             ????
Overhead                             ????            $ 100,000
Machine hours                      3,000            5,000
Labor hours                          2,500          12,000
The Average Direct labor wage rate per hour in Dept. A is $15.

REQUIRED/Solution

1 (a). Calculate the total direct labor cost in Department A.

(b). Calculate the direct labor wage rate in Department B

2. Compute the rate to be used in each department for applying overhead in both departments

3. Assume that during April, the job cost sheet for Job 206 showed the following:

                                Dept. A Dept. B
Materials requisitioned* $ 4000    $ 3000
Direct labor hours             300    90
Machine hours                    80    170
Overhead Applied                ?         ?
* withdrawn from the inventory.

Required:

Compute the total overhead charged to Job 206.
Compute the cost per unit for the Job 206-assuming the job order was to produce 20 units