Question

Simpson Company estimates that its overhead expense will stand at $4,000,000 this year. It also expects...

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.

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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
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