Question

Stainability and job costing.

Lawrence Plastics manufactures custom park furniture and signage from recycled plastics (primarily shredded milk jugs). Many of the company’s customers are municipalities that are required by law to purchase goods that meet certain recycled-content guidelines. (Recycled-content can include post-consumer waste materials, pre-consumer waste materials, and recovered materials). As a result, Lawrence includes two types of direct material charges in its job cost for each job: (1) virgin materials (non-recycled), and (2) recycled-content materials. Lawrence also keeps track of the pounds of each type of direct material so that the final recycled-content percentage for the job can be reported to the customer. Lawrence also reports on the percentage of recycled content as a total of total plastic used each month in its own internal reporting system to help encourage managers to use recycled content whenever possible.
Lawrence Plastics uses a predetermined manufacturing overhead rate of $14 per direct labor hour. Here is a summary of the materials and labor used on a recent job for Summit County:
Description Qauntity Cost
Virgin materials 30 pounds $ 3.80 per pound
Recycled-contect materials 70 pounds $ 3.50 per pound
Direct labor 18 hours $ 19.00 per hour
Required:
1. Calculate the total cost of the Summit Country Job.

Answer 1

Total cost= $953

Step-by-step explanation:

Giving the following information:

Lawrence Plastics uses a predetermined manufacturing overhead rate of $14 per direct labor hour.

Summit County:

Virgin materials 30 pounds $ 3.80 per pound

Recycled-content materials 70 pounds $ 3.50 per pound

Direct labor 18 hours $ 19.00 per hour

The total cost of a determined job is the sum of the direct material used, the direct labor required, and the allocated overhead.

First, we need to calculate the allocated overhead:

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

Allocated MOH= $14*18 hours= $252

Total cost= direct material used + direct labor + allocated moh

Total cost= (30*3.8 + 70*3.5) + (18*19) + 252= $953