Question

SHIM & SHS Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on labor-hours. Beginning of the year, manufacturing overhead and labor-hours were estimated at $160,000 and 40,000 hours respectively, for the year. In June, Job #100 was completed. Materials costs on the job totaled $3,000 and labor costs totaled $4,800 at $6 per hour. Job #100 required 800 labor hours and 1,000 machine hours. At the end of the year, it was determined that the company worked 15,000 labor-hours and 45,000 machine hours for the year, and incurred $190,000 in actual manufacturing overhead costs.

Required:

a. Calculate the predetermined overhead rate for the year.

b. Determine the total costs of Job #100.

c. Assuming that 100 units were completed, determine the unit cost that would appear on the job cost sheet for Job #100 8

d. If SHIM & SHS want to charge to its customer at 40% markup on cost, how much SHIM & SHS charge for Job #100?

Answer 1

a.)	Predetermined Overhead rate	$ 4	Per DLH	=160000/40000
	(Estimated Overhead / Estimated labor hours )
b.)	Job #100
		Amount $
	Material Costs	3,000
	Labor Costs	4,800
	Applied Overhead ( 800 x 4 )	3,200
	Total Cost of Jon #100	$ 11,000
c.)	Unit cost for job #100	$ 110	Per Unit	=11000/100
d.)	SHIM & SHS charge for Job #100	$ 15,400	=11000*140%