Veronica Company allocates overhead

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Description

Problem 19-1

Veronica
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

Direct
material cost $60,000

Direct
labor cost 300,000

Overhead
cost 180,000

Its
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
was collected:

Job G Job H

Direct
material cost $10,000 $10,000

Direct
labor cost 28,000 32,000

Direct
labor-hours 2,400 2,800

Required:

a)
Compute the overhead rate for Veronica Company.

b)
Compute the total production costs of jobs G and H.

c)
At what amounts would customers be billed if the company’s practice was to
charge 180 percent of the production cost of each job?

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