Prather 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 P513 was completed with the following characteristics:
The total job cost for Job P513 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $690
B) $900
C) $1,400
D) $1,210

Question

Prather 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 P513 was completed with the following characteristics:
 The total job cost for Job P513 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $690 
B) $900 
C) $1,400 
D) $1,210

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as follows:
($250,000 estimated total manufacturing overhead costs + $100,000 estimated total direct labor costs) ÷ 25,000 estimated total direct labor hours = $12 predetermined overhead rate per direct labor hour

To calculate the total job cost for Job P513, we need to determine the amount of direct materials, direct labor, and overhead costs used for the job:
Direct materials cost = $250
Direct labor cost = 5 hours × $20 = $100
Overhead cost = 5 hours × $12 = $60
Total job cost = $250 + $100 + $60 = $410
However, we need to include the $800 in indirect materials and $250 in indirect labor that were incurred during the year. Since these costs were not assigned to specific jobs, they must be added to the total job cost:
Total job cost = $410 + $800 + $250 = $1,460
The closest option to this is C, $1,400.

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