Question

# Shire Computer’s predetermined overhead rate is based on direct labor cost. Management estimates the company will...

Shire Computer’s predetermined overhead rate is based on direct labor cost. Management estimates the company will incur \$747,500 of overhead costs and \$575,000 of direct labor cost for the year. During March, Shire began and completed Job 13-56.

1. What is the predetermined overhead rate for the year?
2. Use the information on the following job cost sheet to determine the total cost of the job

• Required 1
• Required 2

What is the predetermined overhead rate for the year?

• Required 1
• Required 2

Using the information on the following job cost sheet, determine the total cost of the job.

 JOB COST SHEET Customer’s Name: Keiser Co. Job No. 13-56 Job Description: 5 plasma monitors—61 inch Direct Materials Direct Labor Overhead Total Cost Date Requisition No. Amount Time-Ticket No. Amount Costs Applied Mar. 8 4-129 \$5,000 T-306 \$700 Mar. 11 4-142 7,020 T-432 1,250 Mar. 18 4-167 3,330 T-456 1,250

Solution 1:

 Overhead Rate Choose Numerator: / Choose Denominator: = Overhead Rate Estimated overhead / Estimated direct labor costs = Overhead rate 747500 / 575000 = 130%

Solution 2:

 Job Cost Sheet Job 13-56 Direct Materials Direct labor Overhead Total Costs Date Requisition No. Amount Time Ticket No. Amount Costs Applied 8-march 4-129 \$5,000 T-306 \$700 \$910 11-march 4-142 \$7,020 T-432 \$1,250 \$1,625 18-march 4-167 \$3,330 T-456 \$1,250 \$1,625 \$15,350 \$3,200 \$4,160 \$22,710