Donald Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2018, they estimated total manufacturing overhead costs at $1,280,000, and they estimated total direct labor costs at $1,600,000. The administration and selling overheads are to be absorbed in each job cost at 18% of prime cost. Distribution cost should be added to each job according to quotes from outside carriage companies. The company wishes to quote for job # 225. Job stats are as follows: Direct materials cost $171,300 Direct labour cost $219,000 Direct labour hours 500 hours Special Design Cost $14,500 Distribution quote from haulage company $19,136 Units of product produced 500 boxes a) Compute Donald Manufacturing Company predetermined manufacturing overhead rate for 2018. b) How much manufacturing overhead was allocated to Job #225? c) Calculate the total cost & quotation price of Job #225, given that a margin of 20% is applied. d) How much was the production cost per unit (cost per box) of finished product?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Donald Manufacturing Company uses a predetermined manufacturing overhead rate based on a
percentage of direct labor cost. At the beginning of 2018, they estimated total
overhead costs at $1,280,000, and they estimated total direct labor costs at $1,600,000.
The administration and selling
Distribution cost should be added to each job according to quotes from outside carriage companies.
The company wishes to quote for job # 225. Job stats are as follows:
Direct materials cost $171,300
Direct labour cost $219,000
Direct labour hours 500 hours
Special Design Cost $14,500
Distribution quote from haulage company $19,136
Units of product produced 500 boxes
- a) Compute Donald Manufacturing Company predetermined manufacturing overhead rate for 2018.
- b) How much manufacturing overhead was allocated to Job #225?
- c) Calculate the total cost & quotation price of Job #225, given that a margin of 20% is applied.
- d) How much was the production cost per unit (cost per box) of finished product?
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