Yancey Productions is a film studio that uses a job-order costing system. The company’s direct materials consist of items such as costumes and props. Its direct labor includes each film’s actors, directors, and extras. The company’s overhead costs include items such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor-dollars.
At the beginning of the year, Yancey made the following estimates:
| Direct labor-dollars to support all productions | $ | 8,390,000 |
| Fixed overhead cost | $ | 5,034,000 |
| Variable overhead cost per direct labor-dollar | $ | 0.19 |
Required:
1. Compute the predetermined overhead rate.
2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs:
| Direct materials | $ | 1,446,000 |
| Direct labor cost | $ | 2,517,000 |
Compute the total job cost for this particular film.
Complete the question by entering your answers in the tabs given below.
Required 1
Compute the predetermined overhead rate. (Round your answer to 2 decimal places.)
|
Complete the question by entering your answers in the tabs given below.
Required 1
Required 2
Compute the predetermined overhead rate. (Round your answer to 2 decimal places.)
Complete the question by entering your answers in the tabs given below.
Required 1
Required 2
Compute the total job cost for this particular film. (Round your intermediate calculations to 2 decimal places.)
|
Answer to Requirement 1.
Predetermined Overhead Rate = Estimated Manufacturing overhead /
Estimated DL Dollar
Estimated Manufacturing overhead = Fixed Manufacturing Overhead +
Variable Manufacturing Overhead
Estimated Manufacturing overhead = $5,034,000 + (8,390,000 *
$0.19)
Estimated Manufacturing overhead = $5,034,000 + $1,594,100
Estimated Manufacturing overhead = $6,628,100
Predetermined Overhead Rate = 6,628,100 / 8,390,000
Predetermined Overhead Rate = $0.79 per DL $
Answer to Requirement 2.
Total Job Cost = Direct Materials + Direct Labor + Overhead
applied
Overhead applied = $0.79 * 2,517,000
Overhead applied = $1,988,430
Total Job Cost = $1,446,000 + $2,517,000 + $1,988,430
Total Job Cost = $5,951,430
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