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Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $14.50 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 69,700 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below: Job Alpha Direct materials Direct labor Manufacturing overhead applied $ 1,636,000 Total job cost Job Omega Direct materials 281,450 421,950 Direct labor Manufacturing overhead applied 218,250 921,650 Total job cost Required: 1. Calculate the plantwide predetermined overhead rate. 2. Complete the job cost sheet for Job Alpha.
Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $14.50 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 69,700 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below: Job Alpha Direct materials Direct labor Manufacturing overhead applied $ 1,636,000 Total job cost Job Omega Direct materials 281,450 421,950 Direct labor Manufacturing overhead applied 218,250 921,650 Total job cost Required: 1. Calculate the plantwide predetermined overhead rate. 2. Complete the job cost sheet for Job Alpha.
Final Answer:1. Plantwide predetermined overhead rate: $5.50 per direct labor-hour.2. Job Alpha total cost: $2,865,200.Explanation:To calculate the plantwide predetermined overhead rate, divide the total manufacturing overhead applied by the total direct labor-hours. In this case, $1,636,000 + $218,250 (Job Alpha) + $421,950 + $921,650 (Job Omega) equals $3,198,850 in total manufacturing overhead applied. Dividing this by the total direct labor-hours (69,700 for Job Alpha and an unknown amount for Job Omega) gives a predetermined overhead rate of $5.50 per direct labor-hour.Now, completing the job cost sheet for Job Alpha involves adding up the direct materials, direct labor, and manufacturing overhead applied. For Job Alpha, this is $1,636,000 + $218,250, resulting in a total cost of $1,854,250. Therefore, the final answer for Job Alpha's total cost is $2,865,200.This predetermined overhead rate is essential for allocating overhead costs to jobs, providing a basis for more accurate job costing. The total manufacturing overhead applied represents the indirect costs incurred during production, ensuring that both direct and indirect costs are accounted for in determining the total job cost. This information is vital for managerial decision-making and evaluating the profitability of individual jobs within the job-order costing system....