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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