such as utilities, depreciation of equipment, senior management salaries, and wa
ID: 2331401 • Letter: S
Question
such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor-dollars. At the beginning of the year, Yancey made the following estimates:
Direct labor-dollars to support all productions $ 8,500,000
Fixed overhead cost $ 5,100,000
Variable overhead cost per direct labor-dollar $ 0.09
Required:
1. Compute the predetermined overhead rate.
2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs:
Direct materials $ 1,380,000
Direct labor cost $ 2,550,000
Compute the total job cost for this particular film.
Explanation / Answer
Total estimated variable overhead=$0.09*8,500,000 direct labor dollars
=$765000
Add:fixed overhead cost estimated=$5,100,000
Total overhead estimated=$5,865,000
1.Predetermined overhead rate=Total overhead estimated/direct labor dollars
=$5,865,000/8,500,000
=69% of direct labor cost(or 0.69 direct labor cost)
2.Total applied overhead=(69%*2,550,000)=$1759500
Hence total job cost=Direct materials+Direct labor cost+Total applied overhead
=(1,380,000+2,550,000+1759500)
which is equal to
=$5,689,500
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