Question

In December 2010, Kent Computer’s management establishes the year 2011 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $756,000 of overhead costs and $540,000 of direct labor cost in year 2011. During March 2011, Kent began and completed Job No. 13-56.

1.	What is the predetermined overhead rate for year 2011? (Omit the "%" sign in your response.)

Predetermined overhead rate

%

2.	Use the information on the following job cost sheet.

JOB COST SHEET
Customer’s Name		Keiser Co.							Job No.	13-56
Job Description		5 color monitors—21 inch
	Direct Materials				Direct Labor				Overhead Costs Applied
Date	Requisition No.	Amount			Time-Ticket No.	Amount			Rate	Amount
Mar. 8	4-129	$	5,000		T-306	$	640
Mar. 11	4-142		7,050		T-432		1,280
Mar. 18	4-167		3,550		T-456		1,280
Totals

Determine the total cost of the job. (Omit the "$" sign in your response.)

Total cost of the job

$

Answer 1

(1) Overhead Rate = Estimated Overhead cost / Estimated Direct Labour

                                              $756000 / $540000 = 140%

(2) Total Cost:-

Direct Material (5000 + 7050 + 3550)	15600
Direct Labour (640 + 1280 + 1280)	3200
Overhead (3200 * 140%)	4480
Total Cost	23280