Problem - Veronica Company allocates overhead costs to jobs on the basis of directo labor-hours. Its estimated average monthly factory costs for 2005 were as follows:
Direct material cost = $60,000
Direct labor cost = $300,000
Overhead cost = $180,000
Its estimated average monthly direct labor-hours are 20,000. Amount the jobs worked on November 2005 were two jobs, G and H, for which the following information was collected:
Direct material cost = Job G, $10,000 - Job H, $10,000
Direct labor cost = Job G, $28,000 - Job H, $32,000
Direct labor hours = Job G, 2,400 - Job H, 2,800
Questions -
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?