Question

Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data:
Total direct labor-hours 70,000
Total fixed manufacturing overhead cost $ 511,000
Variable manufacturing overhead per direct labor-hour $ 2.10
Recently, Job K913 was completed with the following characteristics:
Total direct labor-hours 150
Direct materials $ 705
Direct labor cost $ 4,650
Required:
a. The total job cost for Job K913 is closest to:
O $6,060
O $2,115
O $6,765
O $5,355

Answer 1

Answer:

$6,765

Explanation:

The total cost for job K913 is given by the sum of the costs with manufacturing overhead (fixed and variable), direct materials (M) and direct labor (L).

Since the company uses a predetermined overhead rate based on direct labor-hours, the overhead cost for job K913 is:

$O = F+V\\O=\frac{150*\ 511,000}{70,000} +150*\ 2.10\\O=\ 1,410$

The total cost for the job is:

$C=O+M+L\\C=\ 1,410+\ 705+\ 4,650\\C=\ 6,765$

The total job cost for Job K913 is closest to $6,765.