Question

Pigot Corporation uses job costing and has two production departments, M and A. Budgeted manufacturing costs for the year are as follows: Dept. M Dept. A Direct materials $ 700,000 $ 100,000 Direct labor 200,000 800,000 Factory overhead 600,000 400,000 The actual direct materials and direct labor costs charged to Job. No. 432 during the year were as follows: Direct materials $ 25,000 Direct labor: Department M $ 8,000 Department A 12,000 20,000 Pigot applies manufacturing overhead to production orders on the basis of direct labor cost using departmental rates predetermined at the beginning of the year based on the annual budget. The total cost associated with Job. No. 432 for the year should be:a.$165,000 b.$146,500 c.$143,500 d.$200,500

Answer 1

The total cost for Job No. 432 at Pigot Corporation is calculated using predetermined departmental overhead rates applied to the actual direct labor costs. After applying the overhead rates of 300% and 50% for Departments M and A respectively to the respective labor costs of $8,000 and $12,000, the total cost is found to be $75,000, which does not match any of the provided options.

Step-by-step explanation:

The question relates to the calculation of the total cost for Job. No. 432 in Pigot Corporation using job costing. First, we need to calculate the departmental overhead rates. We do this by dividing the budgeted factory overhead by the budgeted direct labor costs for Department M and Department A respectively.

Department M overhead rate = $600,000 / $200,000 = 3.0 or 300%
Department A overhead rate = $400,000 / $800,000 = 0.5 or 50%

Now, we apply these overhead rates to the actual direct labor costs for Job No. 432:
Overhead for Department M = 300% of $8,000 = $24,000
Overhead for Department A = 50% of $12,000 = $6,000

Adding the overhead to the actual direct materials and direct labor costs gives us the total cost for Job No. 432:
Total Cost for Job No. 432 = Direct Materials + Direct Labor + Applied Overhead
Total Cost for Job No. 432 = $25,000 + $20,000 + $24,000 + $6,000 = $75,000

Therefore, the correct answer is none of the provided options (a, b, c, d).

Answer 2

Correct option is D.

$200,500

Step-by-step explanation:

Manufacturing overhead = [($651,000/217,000) × $25,000] + [($417,000/834,000) × $29,000] = $89,500

Total cost associated with Job. No. 432 = $57,000 + $54,000 + $89,500 = $200,500