Question

Tillman Corporation uses a Job Order Costing system and has two production departments--Molding and Assembly. The company applies manufacturing overhead to production orders on the basis of direct labor costs. Separate departemental predetermined overhead rates are used. Budgeted manufacturing costs for the year are as follows: Annual Budget (Estimates) Molding Assembly Direct Materials $700,000 $100,000 Direct Labor $200,000 $800,000 Manufacturing Overhead $600,000 $400,000 If Job 432 reports $25,000 in direct materials and total direct labor of $20,000 ($8,000 in Molding and $12,000 in Assembly), what is the total cost for Job 432?

A. $55,000
B. $65,000
C. $75,000
D. $50,000?

Answer 1

C. $75,000

Step-by-step explanation:

Departmental OH Rate Molding Assembly

Direct Labor 200000 800000

Manuf. OH 600000 400000

Manuf. OH to Direct Labor Ratio 300% 50%

Molding Assembly Total

Materials 25000

Direct Labor 8000 12000 20000

Applied Manuf. OH [Direct labor * OH Rate] 24000 6000 30000

Total cost for Job 432 75000