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How do you calculate Total Overhead Cost?
WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:
Department -------------------------------------------------------------------------------- Preparation Fabrication Machine-hours 87,000 30,000 Direct labor-hours 38,000 59,900 Direct materials cost $186,000 $196,000 Direct labor cost $287,000 $511,000 Fixed manufacturing overhead cost $182,700 $557,070 Variable manufacturing overhead per machine-hour $2.80 - Variable manufacturing overhead per direct labor-hour - $4.80 -------------------------------------------------------------------------------- Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job: Department -------------------------------------------------------------------------------- Preparation Fabrication Machine-hours 350 74 Direct labor-hours 87 128 Direct materials cost $950 $1,280 Direct labor cost $710 $1,010 -------------------------------------------------------------------------------- My question is how do you compute the total overhead cost?? |
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