Renaissance Creations restores antique stained glass windows. All jobs generate
ID: 2720120 • Letter: R
Question
Renaissance Creations restores antique stained glass windows. All jobs generate some breakage or improper cuts. This scrap can be sold to stained glass hobbyists. Renaissance Creations expects to incur approximately 45,000 direct labor hours during 2013. The following estimates are made in setting the predetermined overhead rate for 2013:
One job that Renaissance Creations completed during 2013 was a stained glass window of the Pierce family crest that took 125 hours, and direct labor is invoiced at $20 per hour. Total direct material cost for the job was $890. Scrap that was generated from this job was sold for $93.
a. What was the predetermined overhead rate (set on the basis of direct labor hours) for 2013?
$ per DLH
b. What was the cost of the Pierce stained glass window?
$
Explanation / Answer
a.Predetermined overhead rate=Estimated total manufacturing overhead/ Estimated direct labour hours
=315000/45000=$7
b.
Total Cost = Prime Cost + Overhead=890+297200=$298090
No of units produced = 93
So Cost pu = Total Cost/No of Units = $298090/93 =$3205.269 per unit