Company allocates overhead costs to jobs on the basis of direct labor-hours.
Its estimated average monthly factory costs for 2005 were as follows:
Average Monthly Costs
material cost $60,000
labor cost 300,000
estimated average monthly direct labor-hours are 20,000. Among the jobs worked
on November 2005 were two jobs, G and H, for which the following information
Job G Job H
material cost $10,000 $10,000
labor cost 28,000 32,000
labor-hours 2,400 2,800
Compute the overhead rate for Veronica Company.
Compute the total production costs of jobs G and H.
At what amounts would customers be billed if the company’s practice was to
charge 180 percent of the production cost of each job?