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BUS 202 (26)
Nick Ross (26)
Lecture 5

BUS 202 Lecture 5: February 1st Premium

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Department
Course
BUS 202
Professor
Nick Ross
Semester
Spring

Description
February 1st Wednesday, February 1, 20179:09 AM • Job costing (CONTINUED) ○ Logeson manufactures computer mic xam material) ----- Estimate Actuals § Machine hours 12,000 14,500 Total MOH \$306,000 \$350,000 § Use Machine hours (MH) as their allocation base § POH = \$306,000/12,000 = \$25.5/MH □ Why the predetermined overhead rate ® To determine the cost of product so the price will be the best suited Creates a tax to cover all that is not covered in manufacturing costs ® § Order: □ 1,200 mice ® Use 1 circuit board (\$2) ® 1 3ft cable (\$.80) ® 1 plastic enclosure (\$.30) ® 1 roller ball (\$.25) ® Each mouse takes 1/10 of a minute (6 sec) of machine time ® What is the cost of this job? ◊ MOH= ((1,200 * (1/10) * \$25.50) /60) = \$51.00 ◊ Direct material cost: } Circuit board: \$2.00 * 1200 = \$2400.00 } \$.80 *1200 = \$960.00 } \$.30 * 1200 = \$360.0 } \$.25 * 1200 = \$300.00 – Total = \$4071 ◊ What is the average cost per mouse } (\$4071) / 1200=\$3.39 ® How much MOH was applied during the year? ◊ 14,500 *\$25.50 = \$369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied by \$369,750.00 -\$350,000 = \$19,750.00 – Within 10% is ok ○ Pottery Works: February 1st Wednesday, February 1, 20179:09 AM • Job costing (CONTINUED) ○ Logeson manufactures computer mic xam material) ----- Estimate Actuals § Machine hours 12,000 14,500 Total MOH \$306,000 \$350,000 § Use Machine hours (MH) as their allocation base § POH = \$306,000/12,000 = \$25.5/MH □ Why the predetermined overhead rate ® To determine the cost of product so the price will be the best suited Creates a tax to cover all that is not covered in manufacturing costs ® § Order: □ 1,200 mice ® Use 1 circuit board (\$2) ® 1 3ft cable (\$.80) ® 1 plastic enclosure (\$.30) ® 1 roller ball (\$.25) ® Each mouse takes 1/10 of a minute (6 sec) of machine time ® What is the cost of this job? ◊ MOH= ((1,200 * (1/10) * \$25.50) /60) = \$51.00 ◊ Direct material cost: } Circuit board: \$2.00 * 1200 = \$2400.00 } \$.80 *1200 = \$960.00 } \$.30 * 1200 = \$360.0 } \$.25 * 1200 = \$300.00 – Total = \$4071 ◊ What is the average cost per mouse } (\$4071) / 1200=\$3.39 ® How much MOH was applied during the year? ◊ 14,500 *\$25.50 = \$369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied by \$369,750.00 -\$350,000 = \$19,750.00 – Within 10% is ok ○ Pottery Works: ◊ 14,500 *\$25.50 = \$369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied by \$369,750.00 -\$350,000 = \$19,750.00 – Within 10% is ok ○ Pottery Works: Allocation BaseMACHINE DIRECT LABOR HOURS HOURS Estimates Molding Painting DLH 12,000 60,000 MH 70,000 8,000 § DM 510,000 650,000 DL Cost 130,000 420,000 FMOH 497,000 615,000 VMOH/MH 1.50 ---------- VMOH/DLH -------- 2.00 □ POH(molding): ® (497,000 + (\$1.50 * 70,000)) / (70,000) = \$8.60 /MH □ POH(painting): (615,000 + (\$2.00 * 60,000)) / (60,000) = \$12.25 /DLH ® JOB 205: Molding Painting DLH 30 84 □ MH 110 20 DM \$470 \$332 DL Cost \$325 \$588 ® Compute the total cost of JOB 205: ◊ DL: } \$325 + \$588 = 913 ◊ DM: } \$470 + \$332 = 802 ◊ MOH: } (110 * \$8.60) + (\$12.25 * 84) = \$1,975.00 ◊ Total Cost: } \$913 + \$802 + \$1,975.00 = \$3,690.00 □ At the end of the year: End of Year Molding Painting Actuals DLH 10,000 62,000 ◊ 14,500 *\$25.50 = \$369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied b
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