07-07-2011, 06:33 AM
Duluth Metal Company has two departments, milling and assembly. The company uses a job costing system that employs a single,
plantwide cost driver rate to apply support costs to jobs on the basis of direct labor hours. That is, the plantwide cost driver rate is computed
by dividing plantwide support cost by total plantwide direct labor hours. The Following estimate are for May.
milling assembly
Support cost rm120k rm 160k
direct labour 8k 12k
machine hours 12k 6k
the following information pertains to jobs 691, which was started and completed during May
milling assembly
direct labor hours 10 40
machine hours 18 8
direct material costs rm800 rm50
direct labor costs rm100 rm600
a) prepare a job sheet for job 691
b) assume nest that instead of using a single, plantwide support cost driver rate, the company uses machine hours as the cost driver
for the application of support costs in the milling department,
and it uses direct labor hours as the cost driver in the assembly departments. (Prepare a job cost sheet for job 691 ? )
c) using the costs you computed in parts (a) and (b) determine the bid price that Duluth Metal will quote if it uses 25% markup on total manufacturing cost.
d) provide reasons why Duluth Metal might prefer the method in (a) or in (b)
plantwide cost driver rate to apply support costs to jobs on the basis of direct labor hours. That is, the plantwide cost driver rate is computed
by dividing plantwide support cost by total plantwide direct labor hours. The Following estimate are for May.
milling assembly
Support cost rm120k rm 160k
direct labour 8k 12k
machine hours 12k 6k
the following information pertains to jobs 691, which was started and completed during May
milling assembly
direct labor hours 10 40
machine hours 18 8
direct material costs rm800 rm50
direct labor costs rm100 rm600
a) prepare a job sheet for job 691
b) assume nest that instead of using a single, plantwide support cost driver rate, the company uses machine hours as the cost driver
for the application of support costs in the milling department,
and it uses direct labor hours as the cost driver in the assembly departments. (Prepare a job cost sheet for job 691 ? )
c) using the costs you computed in parts (a) and (b) determine the bid price that Duluth Metal will quote if it uses 25% markup on total manufacturing cost.
d) provide reasons why Duluth Metal might prefer the method in (a) or in (b)
