problem job costing

Project Description:

vintage auto company manufactures parts to order for antique cars. vintage auto makes everything from fenders to engine blocks. each customer order is treated as a job. vintage auto currently has two jobs, no. 9823 and no. 9824, that are complete, although overhead has not yet been applied. the company wants to know what each job’s cost would be under alternative overhead allocation rates based on: (1) direct labor cost, (2) direct labor hours, and (3) machine hours. estimates for this year are as follows

direct labor cost

$250,000

direct labor hours

20,000

machine hours

7,000

overhead costs

$140,000

depreciation on machinery accounts for 75 percent of the overhead costs. the job-cost sheets show:

 

job 9823

job 9824

direct material

$  860

$1,700

direct labor cost

$1,100

$1,100

direct labor hours

   90

   70

machine hours

  110

  210

required

a. determine the overhead allocation rate under the three suggested allocation bases. round to two decimal places.

b. calculate the cost of job 9823 and job 9824 using each of the three bases. round to two decimal places.

c. discuss which allocation base appears preferable.
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Project Stats:

Price Type: Negotiable

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