Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production . . . . . . . . 100,000 Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .$650,000 Variable manufacturing overhead cost per machine-hour . . . . . . . . . . $3.00 Required: 1. Compute the plantwide predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$450 Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210 Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Compute the total manufacturing cost assigned to Job 400. 3. If Job 400 includes 52 units, what is the unit product cost for this job?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
oody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production . . . . . . . . 100,000Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .$650,000Variable manufacturing overhead cost per machine-hour . . . . . . . . . . $3.00 Required:1. Compute the plantwide predetermined overhead rate.2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$450Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Compute the total manufacturing cost assigned to Job 400.3. If Job 400 includes 52 units, what is the unit product cost for this job?4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?5. If Moody hired you as a consultant to critique its pricing methodology, what would you say?
Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production . . . . . . . . 100,000
Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . .$650,000
Variable manufacturing overhead cost per machine-hour . . . . . . . . . . $3.00
Required:
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job 400 was started and completed. The following information was available with respect to this job:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$450
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210
Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Compute the total manufacturing cost assigned to Job 400.
3. If Job 400 includes 52 units, what is the unit product cost for this job?
4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
5. If Moody hired you as a consultant to critique its pricing methodology, what would you say?
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