Hahn Company uses a job-order costing system. Its plantwide predetermined overhe

Question

Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $21.00 per hour. During the year, the company started and completed only two jobs—Job Alpha, which used 69,500 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below:

Required:

1. Calculate the plantwide predetermined overhead rate.

2. Complete the job cost sheet for Job Alpha. (Direct Matirals + Direct Labor + Manufacturing OH applied= Total Job Cost

Job Alpha Direct materials ? Direct labor ? Manufacturing overhead applied ? Total job cost $ 2,926,000

Explanation / Answer

Using Job Omega Direct Labour of Job Omega 627900 Direct labour rate 21 per hour Direct labour hour ( 627900/21) = 29900 hours Overhead applied in Job 418600 Overhead absorption rate = Overhead / labour hours                                                       ( 418600 / 29900) = $ 14 per hour Now, Job Alpha Total Job Cost Given 2,926,000 Less: Direct labour cost given 1459500 (69500 labour hours @ 21) Less: Overhead applied 973000 (69500 labour hours@ 14) Material cost of Job Alpha 493,500 JOB COST SHEET OF JOB ALPHA Direct material cost 493500 Direct labour cost 1459500 Manufacturing overheads cost 973000 Total Job Cost 2926000

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