Question

Meger Manufacturing uses the direct labor cost method for applying factory overhead to production. The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively. During the year, the company started and completed Job 352A, which had direct material and labor costs of $32,000 and $45,000, respectively. What was the cost of Job 352A? A. $77,000 B. $102,600 C. $113,000 D. $81,000

Answer 1

Answer:

The correct answer is C.

Explanation:

Giving the following information:

The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively.

Job 352A

Direct material= $32,000

Labor costs= $45,000

First, we need to calculate the predetermined manufacturing overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 800,000/1,000,000= $0.8 per direct labor dollar

Now, we can calculate the total cost:

Total cost= direct material + direct labor + allocated MOH

Total cost= 32,000 + 45,000 + (0.8*45,000)= $113,000