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-   -   Managerial accounting cost allocation hw problem, need help (https://www.askmehelpdesk.com/showthread.php?t=704613)

  • Sep 24, 2012, 07:23 PM
    mothani
    Managerial accounting cost allocation hw problem, need help
    Cork Co. uses departmental predetermined overhead rates for allocating overhead to jobs. The rates are based on machine hours for the Filling department and on direct labor cost for the Packaging department. The company estimated the following for 2011:
    Filling Packaging
    Manufacturing overhead cost $5,000,000 $4,000,000
    Machine hours 250,000 100,000
    Direct labor cost $600,000 $2,000,000

    During the month of April, the cost record for Job 64 shows:
    Filling Packaging
    Direct materials $45,000 $35,000
    Direct labor cost $6,000 $5,250
    Machine hours 1,200 550

    Required:
    a) Assuming the Job 64 manufactured 500 units of product, what is the unit cost of Job 64?

    My answer:

    Filling POHR=estimated OH in machine dept/estimated machine hours in machine dept

    F POHR= 5,000,000/250,000= $20/ Machine hour
    then I did the same for Packaging

    Packaging POHR= estimated OH in packaging dept/estimated Direct labor in packaging department

    P POHR= 4,000,000/2,000,000= $2/ DL hour

    Then I made a cost table for job 64:

    Filling dept Packaging dept
    DM: $45,000 $35,000
    DL: $6,000 $5,250
    OH: 1,200*20= $24,000 5,250*2= $10,500
    ----------------------------------------------------------------------------------------------
    Total cost $75,000 $50,750



    Cost per unit= 75,000/500= $150/ unit 50,750/500= $101.5/ unit

    or should it be (75,000+50,750)/500?
    which equals $251.5?

    I'm not sure if what I did is right or wrong, if its wrong please let me know what was my mistake.

    Thank you
  • Sep 24, 2012, 08:17 PM
    paraclete
    Don't overthink the problem

    Either way you got the same answer. There can only be one unit cost
  • Sep 25, 2012, 12:22 AM
    mothani
    So the rest are correct? I mean F POHR and P POHR
  • Sep 25, 2012, 04:38 AM
    paraclete
    Why do you doubt yourself it looks okay to me just glancing over it

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