Question

Mulligan Manufacturing Company uses a job order cost system with overhead applied to products at a rate of 150 percent of direct labor cost. Required: Treating each case independently, selected from the manufacturing data given below, find the missing amounts. You should do them in the order listed. (Hint: For the manufacturing costs in Case 3, first solve for conversion costs and then determine how much of that is direct labor and how much is manufacturing overhead.) (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Enter all amounts as positive values.)

Answer 1

Answer:

a) 25000 labor x 150% rate =37,500 overhead

b) total manufacturing cost:

12,000 +25,000 + 37,500 =  74,500

d) labor  = overhead / 1.5 = 18000 / 1.5 = 12,000

c) total less labor les maufacturing = materials

45,000 - 18,000 - 12,000 = 15,000

e) to solve for labor we express overhead in function of labor:

materials + labor + 1.5labor = total manufacturing

15,000 + 2.5 labor = 35,000

labor = (35,000 - 15,000) / 2.5 = 8000

f) overhead: 8,000 x 1.5 = 12,000

Table to fill:

Direct Material used

12,000    //   c    //   15,000

Direct labor

25,000  //   d   // e

Manufacturing overhead applied

a   //  18,000 //  f

Total current manufacturing costs  

b   //  45,000   //  35,000

Explanation: