5. Lindberg Company uses a normal job-order costing system. There are two depart

Question

5. Lindberg Company uses a normal job-order costing system. There are two departments, Assembly and Finishing, through which most jobs pass. Selected budgeted and actual data for the past year follow:

Assembly Finishing Budgeted overhead $330,000 $1,000,000 Actual overhead 110,000 520,000 Expected activity (direct labor hours) 150,000 25,000 Expected machine hours 25,000 125,000

During the year, several jobs were completed. Data pertaining to one such job, Job 330, follow: Direct materials $730,000 Direct labor cost: Assembly (5,000 hours @ $12 per hr.) $60,000 Finishing (400 hours @ $12 per hr.) $4,800 Machine hours used: Assembly 100 Finishing 1,200 Units produced 10,000

Lindberg uses a plantwide predetermined overhead rate based on direct labor hours (DLH) to assign overhead to jobs.

Required:

a. Compute the predetermined overhead rate.

b. Using the predetermined rate, compute the per-unit manufacturing cost for Job 330. (Note: Round the unit cost to the nearest cent.)

Explanation / Answer

Lindberg Company All Amounts in $ a. Pre-Determined Overhead Rate Total Budgeted Overheads (Assembly + Finishing) = $ 330,000 + $ 1,000,000 = $ 1,330,000 Total Direct Labor Hours expected = 150,000 + 250,000 = 400,000 Pre-determined Overhead Rate = $ 1,330,000 / 400,000 = 3.25 $ per labor hour b. Costs per unit for Job 330 Total Costs incurred Direct Materials 730000 Direct Labor Assembly 60000 Finishing 4800 64800 Overhead Working Based on $ 3.25 per labor hour Assembly 16250 FInishing 1300 17550 Total Costs for Job 330 812350 No. of Units produced 10000 Cost per unit 81.24 $

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