J & J Products Uses Operational Costing In Addition,J & J Allocates Overhead Based on Direct Labour

question 53

Essay

J & J Products uses operational costing.One of their customers has requested 1000 units of an identical product.J & J estimates the following will be incurred to fulfil the customer order:
$\begin{array}{llcc} \text {Total direct materials } &\$2000\\ \text { Total direct labour hours } & \text { 50 hours}\\ \text {Direct lahnur cost mor hours } & \text { \$ 20 per hous } \\\end{array}$

In addition,J & J allocates overhead based on direct labour cost.At the beginning of this year,they estimated overhead costs would total $800 000 and direct labour would cost a total of $3 200 000.
Required:
A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

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Definitions:

Decrease in Assets

A reduction in the value or quantity of the assets held by a company.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on a portion of its profits or losses.

Revenue

The overall income that a corporation gathers from the sales of merchandise or offering of services throughout a designated period.

Prepaid Insurance

An asset account that represents insurance payments made in advance of the coverage period, to be expensed as the insurance coverage is used up.