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3-38 Job cost sheet, markup, single rate versus departmental rates

3-38 Job cost sheet, markup, single rate versus departmental rates
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MANAGEMENT ACCOUNTING
Management Accounting (Atkinson), 5th Edition
3-38 (Job cost sheet, markup, single rate versus departmental rates) Modern Metalworks Company has two departments, milling and assembly. The company uses a job costing system that employs a single, plantwide support cost driver rate to apply support costs to jobs on the basis of direct labor hours. That is, the plantwide cost driver rate is computed by dividing plantwide support costs by total plantwide direct labor hours. The following estimates are for October: Support costs- Milling $120,000, Assembly $160,000 Direct Labor Hours- Milling, 8000, Assembly 12000 Machine Hours- 12000, Assembly 6000 The following information pertains to job 714, which was started and completed during October: Direct Labor hours- Milling 10, Assembly 40 Machine hours- Milling 18, Assembly 8 Direct materials costs- Milling $800, Assembly $50 Direct labor costs- $100, Assembly $600

a. Prepare a job cost sheet for job 714

b. Assume next that instead of using a single, plantwide support cost driver rate, the company uses machine hours as the cost driver for the application of support costs in the milling department, and it uses direct labor hours as the cost driver in the assembly department. Prepare a job cost sheet for job 714.

c. Using the costs you computed in (a) and (b), determine the bid price that Modern Metalworks will quote if it uses a 25% markup on total manufacturing cost.

 

FILE: MS WORD

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