Peter Sennen Corporation makes shirts that it sells to retailers. The company uses a job-order costing system
Question:
Peter Sennen Corporation makes shirts that it sells to retailers. The company uses a job-order costing system in which predetermined overhead rates are used to apply factory overhead costs to jobs. The predetermined rate in the Sewing Department is based on machine hours, and in the Cutting department is based on direct labor cost. The following estimates are made at the beginning of the year.
Sewing | Cutting | |
Direct labor hours | 24,000 | 120,000 |
Machine hours | 140,000 | 10,000 |
Direct material cost | 1,020,000 | 1,300,000 |
Direct labor cost | 260,000 | 840,000 |
Factory overhead cost | 1,204,000 | 1,470,000 |
Job 101 was started on February 1 and completed on February 25. The company's cost records show the following information concerning the job.
Sewing | Cutting | |
Direct labor hours | 60 | 170 |
Machine hours | 220 | 40 |
Direct material cost | 940 | 664 |
Direct labor cost | 580 | 1,360 |
At the end of the year, the records of the company show the actual cost and data for all jobs worked during this year.
Sewing | Cutting | |
Direct labor hours | 20,000 | 124,000 |
Machine hours | 130,000 | 18,000 |
Direct material cost | 860,000 | 1,360,000 |
Direct labor cost | 216,000 | 872,000 |
Factory overhead cost | 1,140,000 | 1,500,000 |
Required:
a. Compute the factory overhead rate used in the Sewing Department during the year.
b. Compute the factory overhead rate used in the Cutting Department during the year.
c. Compute the total factory overhead cost applied to Job 101.
d. What would be the total cost of Job 101?