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Craigco uses job costing for its product costing. They use direct labor hours as a cost...

Craigco uses job costing for its product costing. They use direct labor hours as a cost driver. They expect overhead for the next month to be $12,000. They expect to have 550 direct labour hours over the next month. Craigco pays an average of $25.50 per labour hour.

a) What is Craigco’s predetermined manufacturing overhead rate?

b) Calculate the manufacturing overhead to be allocated to job #1315 that used 105 direct labour hours.

c) Assuming job #1315 used $5,000 in materials, what is total cost of job #1315

. d) Assuming 150 units were produced in job #1315, what is the cost per unit.

e) At the end of the month, overhead costs were $14,000 and direct labour hours were 550. Was manufacturing overhead over-allocated or under allocated? By how much?

f) At the end of the month, overhead costs were $10,000 and direct labour hours were 550. Was manufacturing overhead over-allocated or under allocated? By how much?

g) At the end of the month, overhead costs were $12,000 and direct labour hours were 500. Was manufacturing overhead over-allocated or under allocated? By how much?

h) At the end of the month, overhead costs were $12,000 and direct labour hours were 650. Was manufacturing overhead over-allocated or under allocated? By how much?

i) At the end of the month, overhead costs were $11,000 and direct labour hours were 500. Was manufacturing overhead over-allocated or under allocated? By how much?

j) At the end of the month, overhead costs were $14,000 and direct labour hours were 675. Was manufacturing overhead over-allocated or under allocated? By how much?

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Answer #1

A) predetermined manufacturing overhead rate= EXPECTED OVERHEAD /DIRECT LABOUR HOURS

=12000/550 = $21.82

b) the manufacturing overhead to be allocated to job #1315 that used 105 direct labour hours.=

=predetermined manufacturing overhead rate * DLH

= 21.82 * 105 =$ 2291.1

C) total cost of job #1315= Direct material + direct labour + manufacturing overhead

= 5000+(105*25.5)+(21.82*105)

=5000+ 2677.5 +2291.1 = $ 9968.6

d) Assuming 150 units were produced in job #1315, what is the cost per unit.

=total cost /number of units

=9968.6 / 150 = $ 66.46

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