Job Costs Using a Plantwide Overhead Rate
Perrin Company designs industrial prototypes for outside
companies. Budgeted overhead for the year was $242,000,
and budgeted direct labor hours were 20,000. The average
wage rate for direct labor is expected to be $22 per hour.
During June, Perrin Company worked on four jobs. Data
relating to these four jobs follow:
Job 39
Job 40
Job 41
Job 42
Beginning balance
$28,900
$37,400
$15,000
50
Materials requisitioned
19,800
24,300
7,000
16,700
Direct labor cost
9,900
13,200
11,000
4,000
Overhead is assigned as a percentage of direct labor cost.
During June, Jobs 39 and 40 were completed; Job 39 was
sold at 130 percent of cost. Job 40 is the only job in
Finished Goods Inventory and will remain there until the
customer accepts delivery and pays. Jobs 41 and 42 remain
unfinished at the end of the month.
Required:
1. Calculate the overhead rate based on direct labor cost.
% of direct labor cost
2. Set up a simple job-order cost sheet for all jobs in
process during June. If an amount is zero, enter "0".
Perrin Company
Job-Order Cost Sheets
Job 29 Job 40 Job 41
Job 42
Balance: June 1
Total
3. What if the expected direct labor rate at the beginning
of the year was $24.20 instead of $22? What would the
overhead rate be?
New budgeted direct labor cost = $
New overhead rate =
% of direct labor cost
How would the cost of the jobs be affected?
