The Norman Company recently adopted an incentive plan. Factory workers are paid P7.

50 per unit with a

guaranteed minimum wage of P2,000 per week. Following is a report on employees’ productivity for the
week ending May 16, 2014. All employees worked the full 40-hour week.

WEEKLY SUMMARY
EMPLOYEE'S NAME UNIT PRODUCED
R. Cruz 240
J. Briones 286
C. David 275
A. Mendoza 240
F. Rivera 225
R. Tolentino 285

Required:
A. What amount should be charged towork in process? P 11,632.50
B. What amount should be charged tofactory overhead control? P 712.50

SOLUTION:
Employee Guaranteed Wage Total pay - piece rate Defiency Total payroll
Cruz P 2,000 (240 x 7.50) 1,800 P 200 P 2,000
Briones 2,000 (286 x 7.50) 2,145 - 2,145
David 2,000 (275 x 7.50) 2,062.50 - 2,062,50
Mendoza 2,000 (240 x 7.50) 1,800 200 2,000
Rivera 2,000 (225 x 7.50) 1,687.50 312.50 2,000
Tolentino 2,000 (285 x 7.50) 2,137.50 - 2,137.50
Total P 12,000 P 11,632.50 P 712.50 P 12,345

Company XYZ makes custom motorboats. It incurred the following costs for the justcompleted job B011.
500 pounds of direct materials were used at a cost per pound of $25. The job cost sheet indicates that a
total of 90 direct labor-hours incurred on job B011. The workers were paid at a rate of $18 per hour. The
company applies overhead based on machine hours. At the beginning of the year, it was estimated that
the total amount of overhead would be $180,000 and a total of 30,000 machine hours would be
incurred. Job B011 required 150 machine hours.

Required:
Determine the total cost assigned to Job B011

Predetermined overhead rate: $180,000 = $6.00 per MH

30,000 MH

Direct materials used: 500 pounds X $25.00 = $12,500

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 Direct labor cost: 90 DLH X $18.00 = 1,620
Overhead applied to job B011: $6.00 X 150 MH = 900
Total job cost: $15,020

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