$9.14 per machine hour
Explanation:
Fixed predetermine overhead rate:
= Fixed manufacturing overhead cost ÷ Machine hours required to support estimated production
= 660,000 ÷ 152,000
= 4.34 per machine hour
Variable predetermine overhead rate = $ 4.80 per machine hour
Total predetermine overhead rate:
= Fixed predetermine overhead rate + Variable predetermine overhead rate
= ($4.34 + $ 4.80)
= $9.14 per machine hour
What is Job Order Costing?
Labor costing is a costing method used to determine the cost of manufacturing each product. This costing method is typically used when a manufacturer manufactures a variety of products that differ from each other and needs to calculate the cost of doing a single job. Job costing includes direct labor, direct materials, and manufacturing overhead for that particular job.
To determine the profitability of a job
Job cost helps determine if a job is profitable. This helps the company estimate the value of the materials, labor, and overheads expended to perform that particular job. Efficient labor costing can help companies create competitive low enough quotes, yet still be profitable for your business.
To learn more about Job Order Costing
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