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

Assignment Help:

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

 
     

 


Related Discussions:- Calculate the total direct labor cost & labor wage rate

What percent of the cost of property, In Lowe's Companies, Inc. 2012 Annual...

In Lowe's Companies, Inc. 2012 Annual Report (Form 10-K) 1. Evaluate Lowe's investment in property, plant and equipment. Determine the following amounts as reported by Lowe's on it

Answer, Chen Enterprises purchased 67,000 pounds (cost = $616,400) of direc...

Chen Enterprises purchased 67,000 pounds (cost = $616,400) of direct material to be used in the manufacture of the company''s only product.

Costs and revenues over a range of activity levels, 1. Single product or si...

1. Single product or single mix of products 2. Variable cost, fixed cost and selling price are constant 3. The level of production will equal the level of sales Example:

What was the cost of goods manufactured for the period, A company started w...

A company started with $0 in direct materials, purchased $5,000 of materials, and ended with $300 in materials. Direct labor equaled $4,000. The applied overhead for the period was

allocation of cost, looking for a dissertation of cost allocatio

looking for a dissertation of cost allocation

Profit analysis and cost volume or cvp analysis, Profit Analysis and Cost V...

Profit Analysis and Cost Volume or CVP Analysis CVP Analysis checks the relationship between profit, activity level and the cost. CVP Analysis assists in a broad range of p

Product versus period costs, Product Versus Period Costs Another way to...

Product Versus Period Costs Another way to look at manufacturing costs is to think of them as attaching to a product. In other words, goods result from the manufacturing proces

West Industries, West Industries is a highly decentralized corporation with...

West Industries is a highly decentralized corporation with independent operating divisions. Each division is evaluated and rewarded based on its total net income. One of the divisi

Balance sheet and assuming monthly amortization of patents, Nieland Industr...

Nieland Industries had one patent recorded on its books as of January 1, 2014. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2014, Nieland

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd