Exercise 15-4 Overhead rate; costs assigned to jobs LO P3 In December 2014, Shir

Question

Exercise 15-4 Overhead rate; costs assigned to jobs LO P3 In December 2014, Shire Computer's management establishes the 2015 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will ncur $775,500 of overhead costs and $550,000 of direct labor cost in year 2015. During March 2015, Shire began and completed Job No. 13-56. 1. What is the predetermined overhead rate for year 2015 Overhead Rate Choose Numerator: Choose Denominator: Overhead Rate -Overhead rate

Explanation / Answer

Answer

Overhead Rate

Choose Numerator

/

Choose Denominator

=

Overhead Rate

Overhead Cost

/

Direct Labor Cost

=

Overhead Rate

775,500

/

550,000

=

141%

Overhead Rate is 141% of Direct Labor Cost

2.

Job Cost Sheet

Direct Material

Direct Labor

Overhead

Total Cost

Date

Requisition No.

Amount

Time-Ticket No.

Amount

Cost Applied

8-Mar

4-129

         6,000

T-306

            600

              846.0 (600*141%)

11-Mar

4-142

         7,150

T-432

         1,270

           1,790.7

(1,270*141%)

18-Mar

4-167

         3,550

T-456

         1,340

           1,889.4

(1,340*141%)

      16,700

         3,210

           4,526.1

   24,436.1

Overhead Rate

Choose Numerator

/

Choose Denominator

=

Overhead Rate

Overhead Cost

/

Direct Labor Cost

=

Overhead Rate

775,500

/

550,000

=

141%

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