Question

Fickel Company has two manufacturing departments—Assembly and Testing & Packaging. The predetermined overhead rates in Assembly and Testing & Packaging are $12.00 per direct labor-hour and $8.00 per direct labor-hour, respectively. The company’s direct labor wage rate is $15.00 per hour. The following information pertains to Job N-60: Assembly Testing & Packaging Direct materials $ 345 $ 27 Direct labor $ 75 $ 15 Required: 1. What is the total manufacturing cost assigned to Job N-60? (Do not round intermediate calculations.) 2. If Job N-60 consists of 10 units, what is the unit product cost for this job? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Answer: (a) $530

(b) $53

Explanation:

(a) Labor hours worked :-

Assembly:

Labor hours worked = $\frac{Direct\ labor}{Direct\ labor\ wage\ rate}$

                                  =  $\frac{75}{15}$

                                  = 5 hours

Testing and Packaging:

Labor hours worked = $\frac{Direct\ labor}{Direct\ labor\ wage\ rate}$

                                  =  $\frac{15}{15}$

                                  = 1 hour

Total manufacturing cost:

= Direct material of Assembly and testing + Direct labor of Assembly and testing + overhead of assembly and testing

= ($345 + $27) + ($75 + $15) + [(5 × $12) + (1 × $8)]

= $372 + $90 + $68

= $530

(b) Unit product cost = $\frac{Total\ manufacturing\ cost}{no.\ of\ units}$

                                  = $\frac{530}{10}$

                                  = $53

Answer 2

Giving the following information:

Assembly:

Predetermined overhead rate= $12 per direct labor hour

Direct materials= $345

Direct labor= $75

Testing & Packaging:

Predetermined overhead rate= $8 per direct labor hour

Direct materials= $27

Direct labor= $15

Direct labor rate= $15 per hour

First, we need to allocate costs based on actual direct labor hours worked:

Assembly:

Number of direct labor hours= 75 / 15= 5 hours

Testing & Packaging:

Number of direct labor hours= 15 / 15= 1 hour

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

Assembly:

Allocated MOH= 12*5= $60

Testing & Packaging:

Allocated MOH= 8*1 = $8

Now, we can calculate the total manufacturing cost of Job N-60

Assembly:

Manufacturing cost= 345 + 75 + 60

Total manufacturing cost= $480

Testing & Packaging:

Manufacturing cost=27 + 15 + 8= $50

Total manufacturing cost= 480 + 50

Total manufacturing cost= $530

Finally, the unitary cost:

Unitary cost= total cost / number of units

Unitary cost= 530 / 10

Unitary cost= $53