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ClassworkonJobcosting.docxJob costing Using FBC
Lotus Ltd has identified the following overhead costs and cost drivers for next year
|
Overhead Items |
E ( cost) $ |
|
Setups cost |
90,000 |
|
Ordering Cost |
50,000 |
|
Maintenance cost |
150,000 |
|
Power |
30,000 |
The following is one of the jobs completed during the year
|
|
Job 700 |
Job 701 |
|
Direct materials |
$1200 |
$600 |
|
Direct Labor |
$900 |
$400 |
|
Units completed |
250 |
100 |
|
DLH |
40 |
20 |
|
Number of setups |
2 |
1 |
|
Number of orders |
10 |
4 |
|
Machine hours |
50 |
40 |
|
Kilowatt hours |
60 |
25 |
|
Actual overhead |
$2500 |
$1250 |
The company’s practical activity is 5000 DHL . The company uses DHL to allocate cost to the product
1. Calculate the predetermined rate for the plant using FBC costing for job 700
PR = estimated overhead $[Total] / estimated activity [DHL] in units
2. Calculate the applied cost for Job 700
DHL used in job 700 = 40 hours
Allocated cost =PR x DHL used in job 700
3. Calculate total product cost using FBC for job 700
DM [job 700] =
DL [job 700] =
MO [allocated=-------------
TPC [Job 700]=-------------
4. Calculate the unit cost for job 700?
Unit cost = TPC / units produced
5. Is the overhead over-applied or under-applied
Compare allocated cost and actual cost of Job 700
