Question

Scarlet Company is a job-order firm that follows a normal costing approach. Consider the following information regarding Scarlet Company:

a.Estimated overhead costs $7,500
b.Estimated direct labor hours 1,500 hours
c.Hours worked for Job 10 45 hours
For Job 10, with a total of 45 hours worked, the amount of overhead cost posted is
a. $215.
b. $250.
c. $235.
d. $225."

Answer 1

The overhead cost posted to Job 10 is (Option d) $225, calculated using the predetermined overhead rate of $5 per hour and multiplying it by the actual labor hours of 45 hours worked on Job 10.

Step-by-step explanation:

The student is asking about calculating the overhead costs allocated to a specific job in a job-order costing system using a normal costing approach. The overhead cost applied to Job 10 in Scarlet Company can be determined by calculating the predetermined overhead rate and then multiplying it by the actual direct labor hours worked on the job.

First, we calculate the predetermined overhead rate using the estimated overhead costs and estimated direct labor hours:

Predetermined Overhead Rate = Estimated Overhead Costs / Estimated Direct Labor Hours
= $7,500 / 1,500 hours
= $5 per hour

Next, we apply the predetermined overhead rate to the actual labor hours worked for Job 10:

Overhead Cost for Job 10 = Predetermined Overhead Rate * Hours Worked for Job 10
= $5/hour * 45 hours
= $225

Therefore, the correct answer is d. $225.