Money Manufacturing uses job costing and applies overhead via a normal costing system using direct labor hours as the allocation base. The estimated overhead cost for year 2 is $1,620,000. Also for year 2, the estimated direct labor cost is $1,080,000 and estimated direct labor hours are 60,000. The year 2 actual overhead cost was $2,190,000; while actual direct labor cost was $1,368,750, and actual direct labor hours were 75,000.

Using the information provided, perform the six tasks below in allocating overhead as required using a simple resource driver.

Note: Enter all values as whole numbers (no cents). 

	Direct	Direct	Direct
	Materials	Labor Cost	Labor Hours
Job 1	$ 20,000	$7,600	400
Job 2	18,360	6,120	360
Job 3	23,400	9,000	500

 

Task 1:

What is Money's predetermined overhead rate for Year 2?

 

Task 2:

If the predetermined overhead rate was set at $30 per direct labor hour for year 2, what is the total manufacturing cost of Job 2?

 

Task 3:

If the predetermined overhead rate was $25 per direct labor hour in year 2, how much manufacturing overhead cost was applied to work in process in year 2?

 

Task 4:	If the predetermined overhead rate was $25 per direct labor hour in year 2, was manufacturing overhead overapplied or underapplied in year 2?
Task 5:	If the predetermined overhead rate was $27 per direct labor hour in year 2 and Money wanted to earn a profit of $25,000 on Job 1, what should the selling price of Job 1 be?
Task 6:	If Money decided to use direct labor cost as the allocation basis for overhead, what would the predetermined overhead percentage have been?

Answer rating: 100% (QA)

Task 1 To calculate the predetermined overhead rate for Year 2 we use the formula Predetermined Overhead Rate Estimated Overhead Cost Estimated Direct ... View the full answer