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


 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?

    • 8 years ago
    Solution to Veronica Company Problem

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