Question

Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data:

Total direct labor-hours 85,000
Total fixed manufacturing overhead cost $306,000
Variable manufacturing overhead per direct
labor-hour $ .00
Recently, Job P951 was completed with the following characteristics:
Number of units in the job $5
Total direct labor-hours $100
Direct materials $700
Direct labor cost $8,500
The total job cost for Job P951 is closest to:_____.
a. $9.200.
b. $1,660.
c. $9,460.
d. $10,160.

Answer 1

Total cost= $10,160

Step-by-step explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (306,000/85,000) + 6

Predetermined manufacturing overhead rate= $9.6

Now, we can allocate overhead to Job P951, and calculate the total cost:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 9.6*100

Allocated MOH=$960

Total cost= 700 + 8,500 + 960

Total cost= $10,160