Calculating Unit Product Costs

• Job-Order Costing


  used where different products, with individual and unique features, are produced
• Examples of job-order costing

  wedding planner

  custom home builder

  based on client because every job is different
• Job Cost Sheet


  records the direct materials, direct labor, and manufacturing overhead applied costs charged to that job
• How to measure direct materials cost

  bill of materials

  materials requisition form
• Bill of Materials 


  is a document that list the quantity of each type of direct material needed to complete a unit of product
• Bill of Materials is like a 


  recipe card

  but with you materials
• Materials Requisition Form


  is a document that specifies the type and quantity of materials to be drawn form the storeroom and identifies the job that will be charged for the cost of the materials
• Materials Requisition Form Part 2


  what you pulling from the warehouse, and this gets posted on the Job-Cost Sheet
• How to measure direct labor cot

  time ticket
• Time Ticket


  is an hour-by-hour summary of the employee's activities throughout the day
• Time Ticket Part 2

  labor cost will automatically post to job cost sheet
• Plantwide OH Rate Step 1:

  find estimated total MOH costs of the year
• Plantwide OH Rate Step 2:

  find the estimated allocation base
• Plantwide OH Rate Step 3:

  calculate the predetermined MOH rate

  step 1 / step 2
• Plantwide OH Rate Step 4:

  allocate MOH to each Job

  step 3 x actual amount of allocation base
• Multiple predetermined overhead rates


  uses more than one overhead to apply overhead cots to jobs
• Departmental Approach


  more accurate because they are difference between overhead cost in each department
• Step 1 -3 of plantwide rate are done

  beginning of they year
• Departmental Approach Step 1 :

  find estimated total MOH costs for each department
• Departmental Approach Step 2:

  find estimated allocation base for each department
• Departmental Approach Step 3:

  calculate the predetermined OH rate for each department

  step 1 / step 2
• Departmental Approach Step 4:

  allocate MOMH to the individual job from each department

  Step 3 x actual amount of departmental base
• Step 1 - 3 of departmental Approach are done

  beginning of the year
• 1. Estimated fixed manufacturing overhead for the coming period of $200,000
  2. Estimated variable manufacturing overhead of $2.00 per direct labor hour
  3. Actual manufacturing overhead for the period of $320,000
  4. Actual direct labor-hours worked of 54,000 hours
  5. Estimated direct labor-hours to be worked in the coming period of 55,000 hours.

  The predetermined plantwide overhead rate for the period is closest to:

  $5.64
• 1. A company’s plantwide predetermined overhead rate is $11.00 per direct labor-hour
  2. Its job cost sheet for Job X shows that this job used 18 direct labor hours and incurred direct materials and direct labor charges of $500 and $360, respectively. What is the total cost of Job X?

  $1,058
• direct labor hours 25,500

  fixed MOH $612,000

  variable MOH per direct labor hour $8

  find plantwide predetermined overhead rate?

  $32 / DL hr
• Manufacturing dep. estimated total OH $400,000 cost driver Machine hrs est. cost diver amount of 16,000

  Finishing dept. estimated total OH $350,000 cost driver direct labor hrs est. cost diver amount of 8,750

  find the predetermined rate for each department

  manufacturing = $25 / MH

  finishing = $ 40 / DL hr