Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours.The company based its predetermined overhead rate for the current year on the following data:
Recently,Job K913 was completed with the following characteristics:
The total job cost for Job K913 is closest to:
A) $6,060
B) $2,115
C) $6,765
D) $5,355

Question

Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours.The company based its predetermined overhead rate for the current year on the following data:
 Recently,Job K913 was completed with the following characteristics:
 The total job cost for Job K913 is closest to:
A) $6,060 
B) $2,115 
C) $6,765 
D) $5,355

Quizplus · Accepted Answer

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $511,000 + ($2.10 per direct labor-hour × 70,000 direct labor-hours) = $511,000 + $147,000 = $658,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $658,000 ÷ 70,000 direct labor-hours = $9.40 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $9.40 per direct labor-hour × 150 direct labor-hours = $1,410
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Session Corporation Uses a Job-Order Costing System with a Single