Levron 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 $58,000, variable manufacturing overhead of $2.00 per machine-hour, and 20,000 machine-hours. The company has provided the following data concerning Job P978 which was recently completed: The total job cost for Job P978 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $3,140
B) $892
C) $3,532
D) $3,032

Question

Levron 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 $58,000, variable manufacturing overhead of $2.00 per machine-hour, and 20,000 machine-hours. The company has provided the following data concerning Job P978 which was recently completed:  The total job cost for Job P978 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $3,140 
B) $892 
C) $3,532 
D) $3,032

Quizplus · Accepted Answer

To calculate the total job cost for Job P978, we need to determine the total manufacturing overhead cost and the total direct labor and direct materials cost for the job.

Total manufacturing overhead cost:
Predetermined overhead rate = (Fixed manufacturing overhead cost + Variable manufacturing overhead cost) / Total machine-hours
= ($58,000 + ($2.00 x 20,000)) / 20,000
= $0.60 per machine-hour

Total manufacturing overhead cost = Predetermined overhead rate x Actual machine-hours used
= $0.60 x 900
= $540

Total direct labor cost:
Direct labor cost per hour = Hourly wage rate x Hours worked
= $14.00 x 30
= $420

Total direct materials cost = $2,072

Total job cost = Total direct labor cost + Total direct materials cost + Total manufacturing overhead cost
= $420 + $2,072 + $540
= $3,032

Therefore, the closest total job cost for Job P978 is $3,032, which is answer choice D.

Levron Corporation Uses a Job-Order Costing System with a Single