Question

Placker Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $155,000, variable manufacturing overhead of $3.40 per machine-hour, and 50,000 machine-hours. Recently, Job A881 was completed with the following characteristics:

Total machine-hours 100
Direct materials $ 645
Direct labor cost $ 2,300

The total job cost for Job A881 is closest to: (Round your intermediate calculations to 2 decimal places.)

a. $1,295
b. $3,595
c. $2,950
d. $2,945

Answer 1

Option B,$ 3,595.00 is correct

Step-by-step explanation:

The sum of both fixed and variable manufacturing overhead gives the below amount:

total overhead=$155,000+($3.40*50,000)=$ 325,000.00

Plantwide predetermined overhead rate=total overhead/machine hours=$325,000.00/50,000.00=$6.50

The job cost=(100*$6.50)+$645+$2,300=$650+$645+$2,300=$ 3,595.00

The correct option is B $ 3,595.00

Option C shows that the total job cost is sum of direct labor cost plus the overhead which is wrong.

Option D showed that the total cost is the sum of direct labor cost plus the direct material which is also wrong