Question

Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the year was $760,000 and estimated direct labor hours were 20,000.
What would be recorded as the cost of job WR53?

a. $200.

b. $350.

c. $380.

d. $730.

Answer 1

Answer:

d. $730.

Explanation:

Material cost =                                $200

Direct labor expense = $15 x 10 = $150

Overheads = $38 x 10 =                 $380

Total cost                                         $730

Predetermined overhead rate = Estimated total overhead / estimated direct labor hours = $760,000 / 20,000 = $38 per labor hour.