Question

# Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system...

Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead costs to jobs on the basis of machine-hours. At the beginning of the year, the company used a cost formula to estimate that it would incur \$4,240,200 in manufacturing overhead cost at an activity level of 573,000 machine-hours.

The company spent the entire month of January working on a large order for 8,400 custom made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow:

a. Raw materials requisitioned for production, \$261,000 (80% direct and 20% indirect).

b. Labor cost incurred in the factory, \$174,000, of which \$58,000 was direct labor and \$116,000 was indirect labor.

c. Depreciation recorded on factory equipment, \$63,500.

d. Other manufacturing overhead costs incurred, \$85,100 (credit Accounts Payable).

e. Manufacturing overhead cost was applied to production on the basis of 40,900 machine-hours actually worked during the month.

f. The completed job was moved into the finished goods warehouse on January 31 to await delivery to the customer. (In computing the dollar amount for this entry, remember that the cost of a completed job consists of direct materials, direct labor, and applied overhead.)

Required:

1. Calculate the Actual Manufacturing Overhead Costs Incurred.

Actual Manufacturing Overhead Costs Incurred: \$

2. Compute the amount of Manufacturing Overhead Applied to Production.

Manufacturing Overhead Applied to Production: \$

3. Calculate the total Manufacturing Cost for the job completed in January.

Manufacturing Cost for the job: \$

4. Compute the unit product cost that will appear on the job cost sheet. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Unit product cost: \$ per unit

 Req 1: Actual manufacturing Ovevrheads incurred: Indirect material (261000*20%) 52200 Indirect Labour 116000 Depreciation 63500 Other manufacturing OH 85100 Actual OH incurred 316800 Req 2: Pre-determined OH rate: Estimated OH/ Estimated Machine hours 4240200 /573000 = \$7.40 per MH Oh applied: Actual machine hours worked: 40900 MH OH rate per MH: 7.40 per MH OH applied (40900 MH @7.40): 302660 Req 3: Total Mnaufacturing Cost: Direct material (261000*80%) 208800 Direct labour 58000 OH applied 302660 Total Manufacturing OH 569460 Req 4: Total Manufacturing cost 569460 Divide: Number of units 8400 Unit product cost 67.79

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