Calculate the predetermined overhead rate

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Reference no: EM13496226

Lu Technology, Co., manufactures CDs and DVDs for computer software and entertainment companies. Lu uses job order costing and has a perpetual inventory system.

On April 2, Lu began production of 5,900 DVDs, Job 423, for Stick People Pictures for $1.30 sales price per DVD. Lu promised to deliver the DVDs to Stick People by April 5. Lu incurred the following costs:

Date Labor Time Record No. Description Amount

4/2 655 10 hours @ $14 $140

4/3 656 20 hours @ $13 260

Date Material Requisition No. Description Amount

4/2 63 31 lbs. polycarbonate plastic @ $11 $341

4/2 64 25 lbs. acrylic plastic @ $27 675

4/3 74 3 lbs. refined aluminum @ $42 126

Stick People provides the movie file for Lu burn onto the DVDs at a cost of $0.50 per DVD. Lu Technology allocated manufacturing overhead to jobs based on the relation between estimated overhead of $540,000 and estimated direct labor costs of $432,000. Job 423 was completed and shipped on April 3.


1. Prepare a job cost record for Job 423. Calculate the predetermined overhead rate; then allocate manufacturing overhead to the job.

2. Journalize in summary form the requisition of direct materials (including the movie files) and the assignment of direct labor and manufacturing overhead to Job 423.

3. Journalize completion of the job and the sale of the 5,900 DVDs.

Reference no: EM13496226


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