Question

Job-Order Costing Variables On July 1, Job 46 had a beginning balance of $1,235. During July, prime costs added to the job totaled $560. Of that amount, direct materials were three times as much as direct labor. The ending balance of the job was $1,921. Required: 1. What was overhead applied to the job during July? $ 2. What was direct materials for Job 46 for July? Direct labor? Direct labor $ Direct materials $ 3. Assuming that overhead is applied on the basis of direct labor cost, what is the overhead rate for the company? (Note: Round your answer to the nearest whole percent.) %

Answer 1

Answer:

1 $126

2 $140

3 90%

Explanation:

1. Overhead applied = Closing balance of job - (opening balance of job + prime cost added to the job during the month

= $1,921 - ($1,235 + $560)

= $1,921 - $1,795

= $126

2. Direct labor for job 46 for July.

Direct labor = prime cost / ( 3 parts of direct materials + 1 part of direct labor)

Direct labor = $560 / 4

Direct labor = $140

Therefore, direct labor for job 46 for July is $140

Direct materials for job 46 for July

= Direct labor cost × 3(This is due to the fact that prime cost includes 3 parts of direct materials

= $140 × 3

= $420

3. Overhead rate for the company

= [($126 / $140) × 100

= 90%