Chapter 3 and 4

job order costing is used for

unique made to order products or products made in small batches

y= a + bx

used to find estimated moh y = total moh a= fixed moh bx=variable moh

Pearco estimates that it will require 160,000 direct labor hours to meet the coming period's estimated production level. In addition, the company estimates total fixed manufacturing overhead at $200,000 and variable manufacturing overhead costs of $2.75 per direct labor hour. Find the POHR.

y = a +bx y= 200,000 + 2.75(160,000) total moh= $640,000 POHR= $640,000 / 160,000 = $4.00 per DLH

Harris fabrics computes its POHR annually on the basis of direct labor hours. At the beginning of the year, it is estimated that 20,000 direct labor hours would be required for the periods estimated level of production. The company also estimated $94,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.00 per direct labor hour. Harris actual manufacturing overhead for the year was $123,900 and its actual total direct labor was 21,000 hours.

y=a+bx y=94,000 + 2.00(20,000) total moh= $134,000 POHR= total estimated moh/allocation base POHR= 134,000/20,000 $6.70 per DLH

POHR

predetermined overhead rate is used to apply overhead to jobs and is determined before a project begins

POHR formula

POHR= estimated moh/ allocation base to find estimated moh you use y=a+bx