Question

Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the year was $760,000 and estimated direct labor hours were 20,000. What would be recorded as the cost of job WR53?

Answer 1

D. $730

Step-by-step explanation:

From checks, the complete question is as shown below:

Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the years was $760,000 and estimated direct labor hours were 20,000. What would be recorded as the cost of job WR53?

A. $200

B. $350

C. $380

D. $730

The total cost of the job is the sum of the direct and indirect(overhead) costs. The direct cost includes the cost of material and direct labor.

The overheads given is a function of the direct labor hours. For a unit of Job WR53 at NW Fab,

Direct material cost = $200

Direct labor cost = $15 × 10 = $150

Given that the total overheads for the year based on estimated direct labor hours of 20,000 is $760,000

The overheads per hour

= $760,000/20,000

= $38

Given that 10 direct labor hours are needed,

Overhead cost = $38 × 10

= $380

Total cost of the job

= $200 + $150 + $380

= $730

Answer 2

The question is not complete, find below complete question:

Job WR53 at NW Fab, Inc. required $200 of direct materials and 10 direct labor hours at $15 per hour. Estimated total overhead for the years was $760,000 and estimated direct labor hours were 20,000. What would be recorded as the cost of job WR53?

A. $200

B. $350

C. $380

D. $730

The correct option is D, $730 as shown below

Step-by-step explanation:

Overhead absorption rate is given total overhead /direct labor hours

Overhead absorption rate=$760000/20000

=$38/ labor hour

Hence job WR53 would require $380($38*10 hrs) in overhead cost

The total cost of the job is given as follows:

Direct materials $200

Direct labor cost($15*10) $150

Overhead on the job $380

Total cost $730

The job WR53 would cost $730

In essence, for the job to be profitable, it must be sold at a price beyond $730, otherwise the job might be sold at a loss