Question

The Mason Corporation budgeted overhead at $240,000 for the period for Department A based on a budgeted volume of 60,000 direct labor hours. During the period, Mason started and completed Job B25, which incurred 200 labor hours at a cost of $2,200, and $5,000 of direct materials. What was the cost of Job B25?

Answer 1

Answer:

$8000

Explanation:

Given: Budgeted Overhead $240,000

          Budgeted Labor Hrs 60,000

          Actual Labor Hrs for Job B25 200

          Actual labor cost for B25 $2,200

          Direct Material cost for B25 $5000

Standard/ Budgeted overhead absorption rate = Budgeted Overheads/ Budgeted labor hours = $240,000/60,000 = $4 per labor hours

Budgeted overheads for actual 200 labor hours = 200 × $4 = $800

Labor cost and material cost incurred for Job B25 = $2200 + $5000 = $7200

Add: Budgeted overhead cost for 200 labor hours = $800

Cost of Job B25 = $7200 + $800 = $8000