Kubes 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 total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.50 per direct labor-hour, and 30,000 direct labor-hours. The company has provided the following data concerning Job A477 which was recently completed: The total job cost for Job A477 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $3,450
B) $1,170
C) $3,970
D) $3,320

Question

Kubes 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 total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.50 per direct labor-hour, and 30,000 direct labor-hours. The company has provided the following data concerning Job A477 which was recently completed:  The total job cost for Job A477 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $3,450 
B) $1,170 
C) $3,970 
D) $3,320

Quizplus · Accepted Answer

Predetermined overhead rate = (Fixed manufacturing overhead cost + Variable manufacturing overhead per direct labor-hour x Direct labor-hours) / Direct labor-hours
= ($90,000 + $3.50 x 30,000) / 30,000
= $0.90 per direct labor-hour

Total manufacturing overhead cost = Predetermined overhead rate x Actual direct labor-hours
= $0.90 x 2,600
= $2,340

Total job cost = Direct materials cost + Direct labor cost + Manufacturing overhead cost
= $840 + $1,016 + $2,340
= $3,196

Therefore, the closest total job cost for Job A477 is $3,970 (closest to $3,196) which is option C.

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