Grib Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The predetermined overhead rates for the year are 200% of direct labor cost for Department A and 50% of direct labor cost for Department B. Job 436, started and completed during the year, was charged with the following costs: The total manufacturing cost assigned to Job 436 was:
A) $360,000
B) $390,000
C) $270,000
D) $480,000

Question

Grib Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The predetermined overhead rates for the year are 200% of direct labor cost for Department A and 50% of direct labor cost for Department B. Job 436, started and completed during the year, was charged with the following costs:  The total manufacturing cost assigned to Job 436 was:
A) $360,000 
B) $390,000 
C) $270,000 
D) $480,000

Quizplus · Accepted Answer

Department A manufacturing overhead = Predetermined overhead rate × Amount of the allocation base incurred
$80,000 = 200% × Direct labor
Direct labor = $40,000
Department B manufacturing overhead = Predetermined overhead rate × Amount of the allocation base incurred
= 50% × $60,000 = $30,000
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Grib Corporation Uses a Predetermined Overhead Rate Based on Direct