cost) to establish selling prices for all of its jobs. At the beginning of the year, the com- pany made the following estimates: Department Milling Assembly Machine-hours... 60,000 3,000 Direct labor-hours.. 8,000 80,000 $390,000 $500,000 Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour.... Variable manufacturing overhead per direct labor-hour .. $2.00 .. $3.75 During the current month the company started and completed Job 407. It wants to use its predetermined departmental overhead rates and the information pertaining to Job 407 that is shown below to establish a selling price for this job: Department Job 407 Milling Assembly Machine-hours.... 90 4 Direct labor-hours. 20 .... Direct materials $800 $370 Direct labor cost $70 $280
cost) to establish selling prices for all of its jobs. At the beginning of the year, the com- pany made the following estimates: Department Milling Assembly Machine-hours... 60,000 3,000 Direct labor-hours.. 8,000 80,000 $390,000 $500,000 Total fixed manufacturing overhead cost Variable manufacturing overhead per machine-hour.... Variable manufacturing overhead per direct labor-hour .. $2.00 .. $3.75 During the current month the company started and completed Job 407. It wants to use its predetermined departmental overhead rates and the information pertaining to Job 407 that is shown below to establish a selling price for this job: Department Job 407 Milling Assembly Machine-hours.... 90 4 Direct labor-hours. 20 .... Direct materials $800 $370 Direct labor cost $70 $280
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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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.
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So I’ve asked this question already but the answer I got wasn’t very clear at all. I’ve highlighted the picture so that you can see more specifically what I’m asking. In the first picture were the machine hours, direct labor hours, total fixed manufacturing overhead , variable manufacturing overhead per machine hour, variable manufacturing overhead per direct labor hour is all listed- I know I use those numbers in the equation that is on the bottom of the page, the predetermined overhead rate formula.
My question is regarding the chart that is in the middle of that page. It is titled job 407 and it lists machine hours as 90 for milling And 4 for assembly. Underneath that it lists direct labor hours as 5 for milling and 20 for assembly. I am asking specifically where those numbers have come from and how they have calculated those amounts. I have highlighted the charts for you.
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