Arabica Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2012, they estimated total manufacturing overhead costs at $1,050,000, and they estimated total direct labor costs at $840,000. In June, 2012, Arabica completed job number 511. Job stats are as follows:

Direct materials cost $27,500

Direct labor cost$13,000

Direct labor hours400 hours

Units of product produced: 200 crates

How much was the total job cost?

A) $40,500

B) $56,750

C) $50,900

D) $74,875

Question

Business

Titus

2 July, 18:23

Arabica Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2012, they estimated total manufacturing overhead costs at $1,050,000, and they estimated total direct labor costs at $840,000. In June, 2012, Arabica completed job number 511. Job stats are as follows:

Direct materials cost $27,500

Direct labor cost$13,000

Direct labor hours400 hours

Units of product produced: 200 crates

How much was the total job cost?

A) $40,500

B) $56,750

C) $50,900

D) $74,875

+3

Answers (1)

Know the Answer?

Philip Vega · Answer 1

B) $56,750

Explanation:

Direct materials cost $27,500

Direct labor cost$13,000

As manufacturing overhead rate is based on a percentage of direct labor cost so dividing the manufacturing overheads by direct labor costs we get = $1,050,000,/$840,000 = 1.25

Multiplying this rate with the actual overheads we get 1.25 * 13000 = $16250

The total job cost would be = Direct materials cost+Direct labor cost + budgeted Overheads = $27,500 + $13,000+$16250 = $56,750