The Owens Company uses the machine hour method of applying factory overhead to production.The budgeted factory overhead last year was $200,000,and there were 40,000 machine hours budgeted.Job 84 was started and completed during the period.Direct materials costing $900 were incurred.Twenty-five direct labor hours were worked at a cost of $350,and 40 machine hours were incurred.What was the cost of Job 84?
A)$1,450
B)$1,375
C)$1,250
D)$1,290

Question

Quizplus · Accepted Answer

The cost of Job 84 includes direct materials, direct labor, and applied factory overhead. The applied factory overhead rate is calculated as $200,000 / 40,000 machine hours = $5 per machine hour. For Job 84, the overhead applied is 40 machine hours * $5 = $200. Therefore, the total cost of Job 84 is $900 (direct materials) + $350 (direct labor) + $200 (applied overhead) = $1,450.

The Owens Company Uses the Machine Hour Method of Applying