Outdoor Industries manufactures custom-designed playground equipment for schools and city parks. Outdoor expected to incur $627,000 of manufacturing overhead cost, 41,800 of direct labor hours, and $1,588,400 of direct labor cost during the year (the cost of direct labor is $38 per hour). The company allocates manufacturing overhead on the basis of direct labor hours. During January, Outdoor completed Job 302. The job used 155 direct labor hours and required $14,500 of direct materials The City of Westlake has contracted to purchase the playground equipment at a price of 26% over manufacturing cost.
Requirement
1. Calculate the manufacturing cost of Job 302.
First identify the formula, then calculate the predetermined overhead rate.
Estimated yearly / Estimated yearly = Predetermined overhead rate
overhead costs direct labor hours
627,000 / 41,800 = 15 per hour
Calculate the manufacturing cost of Job 302.
Direct materials 14,500
Direct labor
Manufacturing overhead
Total job cost