Asked by Sewar Rawabdeh on Jun 03, 2024
Verified
Levron 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 $58,000, variable manufacturing overhead of $2.00 per machine-hour, and 20,000 machine-hours. The company has provided the following data concerning Job P978 which was recently completed: The total job cost for Job P978 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $3,140
B) $892
C) $3,532
D) $3,032
Total Job Cost
The total expense attributed to producing a specific job, including materials, labor, and overhead costs.
Predetermined Overhead Rate
A rate calculated before a period begins, used to allocate manufacturing overhead costs to individual units of production based on a chosen activity base.
Machine-Hours
A measure of production volume or activity based on the number of hours machines are operated in the manufacturing process.
- Evaluate the complete manufacturing costs for certain jobs within a job-order costing structure.
Verified Answer
Total manufacturing overhead cost:
Predetermined overhead rate = (Fixed manufacturing overhead cost + Variable manufacturing overhead cost) / Total machine-hours
= ($58,000 + ($2.00 x 20,000)) / 20,000
= $0.60 per machine-hour
Total manufacturing overhead cost = Predetermined overhead rate x Actual machine-hours used
= $0.60 x 900
= $540
Total direct labor cost:
Direct labor cost per hour = Hourly wage rate x Hours worked
= $14.00 x 30
= $420
Total direct materials cost = $2,072
Total job cost = Total direct labor cost + Total direct materials cost + Total manufacturing overhead cost
= $420 + $2,072 + $540
= $3,032
Therefore, the closest total job cost for Job P978 is $3,032, which is answer choice D.
Learning Objectives
- Evaluate the complete manufacturing costs for certain jobs within a job-order costing structure.
Related questions
Session Corporation Uses a Job-Order Costing System with a Single ...
Assume That the Company Uses a Plantwide Predetermined Manufacturing Overhead ...
Assume That the Company Uses a Plantwide Predetermined Manufacturing Overhead ...
Dietzen Corporation Has Two Manufacturing Departments--Casting and Finishing ...
Dancel Corporation Has Two Production Departments, Milling and Finishing ...