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

To calculate the total job cost for Job K913, we need to apply the predetermined overhead rate to the actual direct labor hours worked on the job, and add in the actual cost of direct materials and direct labor used on the job.

Direct material cost = $910
Direct labor cost = $1,275 (45 hours x $28.33 per hour)

Actual manufacturing overhead = $635 (22 direct labor hours x $28.85 per direct labor hour)

Total job cost = Direct material cost + Direct labor cost + Actual manufacturing overhead
= $910 + $1,275 + $635
= $2,820

Therefore, the closest option is C) $6,765. 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 11ea7998_5f57_c973_911b_7b216dc92c59_TB2627_00_TB2627_00

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