Question

Placker Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $155,000, variable manufacturing overhead of $3.40 per machine-hour, and 50,000 machine-hours. Recently, Job A881 was completed with the following characteristics: Total machine-hours 100 Direct materials $ 645 Direct labor cost $2,300 The total job cost for Job A881 is closest to:

Answer 1

Answer:

Total cost of job A881= $9,445

Explanation:

The total cost of Job 881 would be the sum of the direct cost and the manufacturing overhead

Total cost = Direct material + direct labour + variable manufacturing overhead + Fixed  Overhead

Direct material and labour represent cost of material and labour incurred wholly and directly for Job A881

The overhead absorption rate(OAR) would be used to charge fixed manufacturing overhead to Job A881

The absorbed overhead = OAR × actual machine hours used for Job A881

OAR = budgeted overhead ÷ budgeted machine hours

  OAR    = $155,000 ÷ 50,000 machine hours = $3.1  per machine hour

Fixed manufacturing overhead absorbed = $3.1 × 100 = $3,100

Variable manufacturing overhead = $3.40 × 100 = $3,400

Total cost of job A881= 645 + 2,300 + 3,400 + 3,100 = $9,445

Total cost of job A881= $9,445