Chapter 19, Problem E19.27E

To determine

Concept Introduction:

Overhead Cost : Overhead cost is indirect cost. These are the cost which is not directly attributable to the job but essential for manufaturing a commodity.

Pre-Determined Overhead Allocation Rate: Overhead Allocation Rate is the rate of allocating the overhead cost of producing the product or providing the service in respect of particular activity. Like if machine equipment is used to produce the product then overhead cost should be allocated on the basis of machine hours.

Requirement1

To Calculate:

1. (a) Hourly Direct Labor Cost Rate

(b) Pre determined Overhead Allocation Rate

To determine

Requirement2

To Determine

1. Predicted cost of the Root Manufacturing Job

To determine

Requirement 3

To Determine

1. Bid amount to be quoted by Martin Realtors for job by Root Manufacturing