Calculate the total direct labor cost & labor wage rate, Cost Accounting

Peter Coffin and Paul Bearer own The Grave Undertaking, Inc. and their firm uses a predetermined overhead rate to apply overhead to the production of custom-built coffins.  They use a job order cost system.  Overhead is applied on the basis of labor hours in Dept. A and on the basis of machine hours in Dept. B.   At the start of the year the company made the following budgets for the year's activity:

 

                                                      Dept. A                             Dept. B

Direct Material Cost           mce_markernbsp;  120,000                      $ 150,000

Total Product Cost                                280,000                        395,000

Direct labor Cost                                       ????                           ????

            Overhead                                     ????                        mce_markernbsp;  100,000

            Machine hours                  3,000                             5,000

            Labor hours                                  2,500                           12,000                   

 The Average Direct labor wage rate per hour in Dept. A is $15. 

REQUIRED/Solution 

1 (a). Calculate the total direct labor cost in Department A. 

 (b). Calculate the direct labor wage rate in Department B 

 

Basis of overhead recovery rate in Dept. A = Labour hours.

   

Basis of overhead recovery rate in Dept. B = Machine hours.

   
     

Budegeted Cost sheet

 

Amount in $

 

Dept. A

Dept. B

Direct materials

       120,000

          150,000

Direct labor

         37,500

          145,000

Prime Cost

       157,500

          295,000

Overheads

       122,500

          100,000

Total Product cost

       280,000

          395,000

 

 

 

     
     

Computation of direct labor cost in Dept. A

 

 

Average Direct labor wage rate per hour in Dept. A,(a) = 

$15

 

Labor hours,(b) =

           2,500

 

Total direct labor cost in Department A (a*b), $

         37,500

 

 

 

 
     

Computation of total overheads budgeted  for department A

 

 

Amount in $

 

 

Dept. A

 

Total product cost

       280,000

 

Less: direct materials

       120,000

 

Less: direct labor

         37,500

 

 

 

 

Budgeted overhead for department A

       122,500

 

 

 

 
     

Computation of direct labor wage rate in Department B

 

 

Total labor cost, $, (a)

       145,000

 

Direct labor hours (b)

         12,000

 

Therfore direct labor wage rate in department B (a/b) =

           12.08

 
     

 

Posted Date: 7/23/2012 2:27:43 AM | Location : United States







Related Discussions:- Calculate the total direct labor cost & labor wage rate, Assignment Help, Ask Question on Calculate the total direct labor cost & labor wage rate, Get Answer, Expert's Help, Calculate the total direct labor cost & labor wage rate Discussions

Write discussion on Calculate the total direct labor cost & labor wage rate
Your posts are moderated
Related Questions
You have recently graduated from VU and are now working for a small accounting firm. The firm recently purchases MYOB software for internal use. Upon learning that you had learnt M

Relationship among Financial Accounting and Cost Accounting The difference among management and cost accounting may be highlighted by using a number of questions namely as;

Change in Fixed Cost In graph yx shows the existing profit curve for a company along with a fixed cost OY break=-even point B, margin of safety M; profit SX whereas sales volu

Both the parts, Profit and Loss Account and Trading Account of last account are interdependent upon each other. Gross Profit or loss plays a very important role in the calculation

Flexible Budget Flexible budget is a budget that is designed to change in accordance along with the level of activity attained. It includes budgeting at various levels in anti

Lindon Company is the exclusive distributor for an automotive product that sells for $43 per unit and has a CM ratio of 35%. The company''s fixed expenses are $421,400 per year. Th

ADVANTAGES OF STANDARD COSTING 1.     It offers a yardstick for measurement of performance. 2.     It helps 'Management by Exception'. 3.     It allows the management to

Atlanta Company stock is expected to follow an exponential growth rate. The relationship between the current stock price P0, future price PT after time T, and the continuously comp

ANNUAL DEMAND = 2400 UNITS ORDERING COST PER UNIT = RS.4.00/- UNIT PRICE = RS 2.40/- STORAGE COST = 2% P.A INTEREST RATE = 10 % P.A LEAD TIME = HALF MONTH CALCULATE ECONOMIC ORDER

Overhead Costs Introduction Overhead costs may be defined like the net cost of indirect materials, indirect expenses and indirect labour. They may happen or be charged to