Veronica Company allocates overhead

 

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?