Welcome to the article Newhard Company assigns overhead cost to jobs on the basis of 118 of direct labor cost The job cost sheet for Job 313 includes 27. On this page, you will learn the essential and logical steps to better understand the topic being discussed. We hope the information provided helps you gain valuable insights and is easy to follow. Let’s begin the discussion!
Answer :
Final answer:
The total manufacturing cost assigned to Job 313 is $50,400, which is the sum of direct materials, labor, and overhead costs. The unit product cost for Job 313 is $28 per unit, calculated by dividing the total manufacturing cost by the number of units produced. 'Spreading the overhead' refers to the allocation of fixed overhead costs to each unit of output.
Explanation:
The Newhard Company determines it's overhead costs based on the direct labor cost. In the given scenario, the overhead costs for Job 313 can be calculated as 118% of the direct labor cost, which is equal to $12,508 ($10,600 x 1.18).
The total manufacturing cost assigned to Job 313, therefore, is the sum of direct materials cost, direct labor cost, and overhead cost, which comes out to be $50,400 ($27,292 + $10,600 + $12,508).
Next, to calculate the unit product cost, we divide the total manufacturing cost by the quantity of units produced in Job 313. Therefore, the unit product cost for Job 313 is $28 ($50,400 / 1,800 units).
Spreading the overhead means allocating the fixed overhead costs to each unit of output produced. It helps to get a more accurate picture of the production cost per unit, which is crucial for pricing and profitability analysis.
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