Question

Vermillion Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Vermillion worked on Job 15 in May. Consider the following information regarding Job 15:

Balance, 5/1 $32,000
Direct materials 26,000
Direct labor 30,000
Engineering hours 25
Number of parts 120
Direct labor hours 1,800
Engineering design rate $40
Purchasing rate 10
Other overhead rate 8
Based on the provided data, calculate the total cost for Job 15.
$106,400
$104,600
$160,400
$140,600

Answer 1

The total cost for Job 15 at Vermillion Company is calculated by summing the opening balance, direct materials, direct labor, and various overhead costs based on activity-based costing rates, resulting in a total cost of $104,600.

Step-by-step explanation:

To calculate the total cost for Job 15 at Vermillion Company using activity-based costing, we need to add up all the costs associated with the job. First, we begin with the opening balance and add the direct materials and direct labor costs:

• Opening balance: $32,000
• Direct materials: $26,000
• Direct labor: $30,000

Next, we need to calculate the overhead costs based on the activity-based costing rates provided:

• Engineering design overhead: 25 engineering hours × $40 per hour = $1,000
• Purchasing overhead: 120 parts × $10 per part = $1,200
• Other overhead: 1,800 direct labor hours × $8 per hour = $14,400

Adding these overhead costs to the initial aggregate:

Total cost = Opening Balance + Direct Materials + Direct Labor + Engineering Design Overhead + Purchasing Overhead + Other Overhead

Total cost = $32,000 + $26,000 + $30,000 + $1,000 + $1,200 + $14,400

Therefore, the total cost for Job 15 is:

$32,000 + $26,000 + $30,000 + $1,000 + $1,200 + $14,400 = $104,600