Yancey Productions is a film studio that uses a job-order costing system. The co
ID: 2510169 • Letter: Y
Question
Yancey Productions is a film studio that uses a job-order costing system. The company’s direct materials consist of items such as costumes and props. Its direct labor includes each film’s actors, directors, and extras. The company’s overhead costs include items 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:
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:
Compute the total job cost for this particular film.
Direct labor-dollars to support all productions $ 8,000,000 Fixed overhead cost $ 4,800,000 Variable overhead cost per direct labor-dollar $ 0.05Explanation / Answer
Answer:-
Direct labor-dollars to support all productions = $ 8,000,000
Fixed overhead cost = $ 4,800,000
Overhead Rate for Fixed Cost per Direct Labour Dollar = 4,800,000 / 8,000,000
= $ 0.6
Variable overhead cost per direct labor-dollar = $ 0.5
Therefore,
Predetermined overhead rate per Direct Labour-Dollar = 0.6+0.5
= $ 1.1
Total Job Cost
Direct Materials = $ 1,259,000
Direct Labour Cost = $ 2,400,000
Overhead Cost = 2,400,000 * 1.1
= $ 2,640,000
Total Job Cost = 1,259,000 + 2,400,000 + 2,640,000
= $ 6,299,000
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