Question

MNO Corporation uses a job-order costing system with a predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data:Total estimated direct labor-hours 50,000Total estimated fixed manufacturing overhead cost $ 285,000Estimated variable manufacturing overhead per direct labor-hour $ 3.80Recently, Job P123 was completed with the following characteristics:Total actual direct labor-hours 20Direct materials $ 710Direct labor cost $ 500The total job cost for Job P123 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Total cost for Job P123 = $1,400

Step-by-step explanation:

For Job P123 we have following information

Total labor hours = 20

Direct Materials = $710

Direct Labor cost = $500

Manufacturing Overhead cost = 20 hours X $3.8 per labor hour = $76

Fixed Manufacturing Overhead Cost Allocated to this job =

($285,000 / 50,000 ) X 20 hours = $114

The total cost for Job P123 = $710 + $500 + $76 + $114 = $1,400

Note: Fixed Manufacturing cost is allocated based on number of actual direct labor hours, as the entire activity of the organisation is not provided.

The total cost for Job P123 = $1,400