Question

Simpson Company estimates that its overhead expense will stand at $4,000,000 this year. It also expects the direct labor cost to be $2,000,000. It traditionally applies overhead using direct labor cost as its basis. Job No. 305 is charged with $150,000 of direct materials costs and $100,000 of direct labor cost.

Calculate the predetermined overhead rate for Simpson Company

Calculate the total manufacturing costs for Job No. 305.

Answer 1

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Simpson Company
Answer 1
Particulars	Amount $	Note
Budgeted overhead expense	4,000,000.00	A
Budgeted direct labor cost	2,000,000.00	B
Predetermined overhead rate	200.00%	C=A/B
Workings for Answer 2	Amount $
Labor cost of Job 305	150,000.00	D
Predetermined overhead rate	200.00%	See C
Overhead applied	300,000.00	E=D*C
Final Answer 2	Amount $
Direct materials costs	100,000.00
Labor cost	150,000.00
Overhead applied	300,000.00	See E
Total manufacturing costs for Job No. 305	550,000.00