A company has identified the following overhead costs and cost drivers for the coming year: (CIA adapted) Budgeted direct labor cost was $100,000 and budgeted direct material cost was $280,000.The following information was collected on three jobs that were completed during the year: If the company uses traditional costing and allocates overhead using direct labor cost,what is the cost of each unit of Job 102?
A)$340.
B)$392.
C)$440.
D)$520.

Question

A company has identified the following overhead costs and cost drivers for the coming year: (CIA adapted)  Budgeted direct labor cost was $100,000 and budgeted direct material cost was $280,000.The following information was collected on three jobs that were completed during the year:  If the company uses traditional costing and allocates overhead using direct labor cost,what is the cost of each unit of Job 102?
A)$340. 
B)$392. 
C)$440. 
D)$520.

Quizplus · Accepted Answer

Total overhead cost = $168,000 ($112,000 + $28,000 + $28,000)

Allocation rate (using direct labor cost) = $168,000 / $100,000 = 1.68

Cost of Job 102 = Direct materials + (Direct labor x Allocation rate) + Overhead

= $40,000 + ($24,000 x 1.68) + $56,000

= $40,000 + $40,320 + $56,000

= $136,320

Cost per unit of Job 102 = Cost of Job 102 / Number of units

= $136,320 / 348

= $392

A Company Has Identified the Following Overhead Costs and Cost