Question

Shotter Manufacturing is a small textile manufacturer using machine hours to calculate the single indirect cost rate to allocate manufacturing overhead costs to various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the jackets to be made for Jackson High School Science Olympiad. Shotter ManufacturingJackson High School Job Direct materials$25,000$600 Direct manufacturing labor$5,000$150 Manufacturing overhead costs $30,000 Machine hours (mh)50,000 machine hour 800 machine hour Required: a) For Shotter Manufacturing, determine the annual manufacturing overhead cost allocation rate. b) Determine the amount of manufacturing overhead costs allocated to the Jackson High School job. c) Determine the estimated total manufacturing costs for the Jackson High School job.

Answer 1

Results are below.

Step-by-step explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 30,000 / 50,000

Predetermined manufacturing overhead rate= $0.6 per machine hour

Now, we can allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 06*500

Allocated MOH= $300

Finally, total production costs:

Total cost= 600 + 150 + 300

Total cost= $1,050