Question

On March 1 a dressmaker starts work on three custom-designed wedding dresses. The company uses job order costing and applies overhead to each job (dress) at the rate of 40% of direct materials costs. During the month, the jobs used direct materials as shown below. Compute the amount of overhead applied to each of the three jobs. Job 1 Job 2 Job 3 Direct materials used . . . . . . . . . $5,000 $7,000 $1,500

Answer 1

Answer: Overhead applied= $2000,$2,800,$600 for Job1, 2 and 3 respectively.

Explanation:

Overhead applied = Direct materials x rate of overhead on materials cost

                                                      Job 1      Job 2     Job 3

Direct materials used . . . . . . . . . $5,000   $7,000    $1,500

Rate                                                  40%         40%         40%

Overhead applied                         $2000       $2,800    $600

Calculation

Job 1 = 40% x 5000 = $2000

Job 2 = $7,000 x 40%=$2800

Job 3 -$1,500 x 40%=$600