EXAMPLE:

G.A. Courtney & Sons build homes.  Each home isconsidered a job; costs are accumulated by job to determine thefinal cost of a home. The company builds two types of homes.Standard models are framed at factory using high-tech machinery andtake little direct labor to complete. Custom homes are framed andfinished at the building site using mostly direct labor and fewmachine hours. Annual estimates for each department follow:

	Framing	Finishing	Total
Total Overhead	$400,000	$167,600	$567,600
DLH	9,700	41,900	51,600
MH	160,000	-0-	160,000

During the year, five jobs were started and completed. Jobs #101and #103 were custom homes.  The remaining jobs werestandard models. Direct materials (DM), direct labor (DL), directlabor hours (DLH), and machine hours (MH) for each job follow:

	DM	DL	Framing DLH	Finishing DLH	Total DLH	MH
Job #101	$364,000	$280,000	1,000	19,000	20,000	500
Job #102	90,000	100,000	2,800	500	3,300	46,500
Job #103	455,000	350,000	600	20,890	21,490	1,600
Job #104	144,000	160,000	2,100	800	2,900	52,000
Job #105	127,800	142,000	3,200	710	3,910	59,400
Total	$1,180,800	$1,032,000	9,700	41,900	51,600	160,000

REQUIRED:

(1)        Calculate thepredetermined overhead rate (POR) using:

(a)        A single,plantwide cost pool and DLH as the application base.

(b)        Separate totaloverhead amounts for each department (one total for framing and onefor finishing). Use MH as the application base for framing and DLHfor finishing.

(2)        Use thefollowing format to calculate:

            (a)        Thetotal costs of each job using the single,plantwide POR(from                                                      (1)(a)above).   

(b)        The total costsof all jobs using the single, plantwide POR (from(1)(a) above).

Note: the “totals” line item atthe bottom of the table satisfy this requirement.

             

	DM	DL	OH	Total
Job #101	$xxx	$xxx	$xxx	$xxx
Job #102	xxx	xxx	xxx	xxx
Etc……
Totals	$xxx	$xxx	$xxx	$xxx

(3)        Use thefollowing format to calculate:

(a)        The total costsof each job using the two departmental (framingand finishing) PORs (from (1)(b) above).

(b)        The total costsof all jobs using the two departmental (framingand finishing) PORs (from (1)(b) above)

Note: the “totals” line item atthe bottom of the table satisfy this requirement.

	DM	DL	Framing OH	Finishing OH	Total
Job #101	$xxx	$xxx	$xxx	$xxx	$xxx
Job #102	xxx	xxx	xxx	$xxx	xxx
Etc……
Totals	$xxx	$xxx	$xxx	$xxx	$xxx