Elkland Restaurant Supply manufactures commercial stoves and ovens for restaurants
Elkland Restaurant Supply manufactures commercial stoves and ovens for restaurants and bakeries. Elkland uses job costing to calculate the costs of its jobs with direct labour cost as its manufacturing overhead allocation base. At the beginning of the current year, Elkland estimated that its overhead for the coming year will be $292,600. It also anticipated using
27,500 direct labour hours for the year. Elkland pays its employees an average of $19 per direct labour hour. Elkland just finished Job 371, which consisted of two large ovens for a regional bakery. The costs for Job 371 were as follows:
Job 371
Direct materials used............................................................................. $17,500
Direct labour hours used....................................................................... 165
Requirements
1. What is Elkland’s predetermined manufacturing overhead rate based on direct labour cost?
2. Calculate the manufacturing overhead to be allocated based on direct labour hours to Job 371.
3. What is the total cost of Job 371?
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