Chico's Clockworks uses job order costing for its custom clock-making business. Job GF1260 is a custom-made grandfather clock. Chico's job cost sheet for Job GF1260 shows a total cost of $4,265, including direct labor of 50 hours at $20 per hour. Overhead is applied at 100% of direct labor cost. What is the direct materials cost for Job GF1260? A : $3,455 B : $1,000 C : $2,265 D : $2,895

Question

Business

Dylan Lowe

19 February, 19:03

Chico's Clockworks uses job order costing for its custom clock-making business. Job GF1260 is a custom-made grandfather clock. Chico's job cost sheet for Job GF1260 shows a total cost of $4,265, including direct labor of 50 hours at $20 per hour. Overhead is applied at 100% of direct labor cost. What is the direct materials cost for Job GF1260? A : $3,455 B : $1,000 C : $2,265 D : $2,895

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Answers (1)

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Moshe Berger · Answer 1

Option C,$2,265, is correct

Explanation:

Labor cost = direct labor hours*rate per hour

direct labor hours is 50 hours

direct labor cost per hour is $20

labor cost=50*$20=$1,000

Overhead was applied as 100% of direct labor cost

overhead=100%*$1000=$1000

Total cost of job=direct material cost+direct labor+overhead

direct material cost=total cost-direct labor-overhead

direct material cost=$4,265-$1000-$1000=$2,265

The correct option is C,$2,265