Jordan Company Solution

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Jordan Company Solution
Jordan Company has two departments, X and Y. Overhead is applied based on direct labor cost in Department X and machine-hours in Department Y. The following additional information is available: Budgeted Amounts Direct labor cost Factory overhead Machine-hours Actual data for Job #10 Direct materials requisitioned Direct labor cost Machine-hours Department X $180,000 $225,000 51,000 mh Department X $10,000 $11,000 5,000 mh Department Y $165,000 $180,000 40,000 mh Department Y $16,000 $14,000 3,000 mh

Required: a. Compute the budgeted factory overhead rate for Department X. b. Compute the budgeted factory overhead rate for Department Y. c. What is the total overhead cost of Job 10? d. If Job 10 consists of 50 units of product, what is the unit cost of this job? e. If Department Y incurred 42,000 machine hours (all billed out) and actual factory labor was $193,200, was the overhead under-applied or over-applied. By how much? Answer: a. $225,000/$180,000 = 125% b. c. d. e. $180,000/40,000 hrs. = $4.50 per hour ($11,000 x 125 percent) + ($4.50 x 3,000 hrs.) = $27,250 $10,000 + $16,000 + $11,000 + $14,000 + $27,250 = $78,250/50 units = $1,565 per unit. So divide each of the above by 50 to get the unit-cost structure. 42,000/units x $4.50/unit = 189,000. So under-applied by $4,200 (189,000 less 193,200)

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