Jonathan Mfg. adopted a job-costing system. For the current year, budgeted cost driver activity levels for direct labor hours and direct labor costs were 20,000 and $100,000, respectively. In addition, budgeted variable and fixed factory overhead were $50,000 and $25,000, respectively. Actual costs and hours for the year were as follows:Direct labor hours 21,000Direct labor costs $110,000Machine hours 35,000For a particular job, 1,500 direct labor hours were used. Using direct labor hours as the cost driver, what amount of overhead should be applied to this job? A. $5,625B. $5,357C. $7,500D. $3,214

Question

Business

Elisabeth Blackburn

5 December, 06:33

Jonathan Mfg. adopted a job-costing system. For the current year, budgeted cost driver activity levels for direct labor hours and direct labor costs were 20,000 and $100,000, respectively. In addition, budgeted variable and fixed factory overhead were $50,000 and $25,000, respectively. Actual costs and hours for the year were as follows:Direct labor hours 21,000Direct labor costs $110,000Machine hours 35,000For a particular job, 1,500 direct labor hours were used. Using direct labor hours as the cost driver, what amount of overhead should be applied to this job? A. $5,625B. $5,357C. $7,500D. $3,214

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Answers (1)

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Lana Lyons · Answer 1

C. $ 7,500

Explanation:

Estimated direct labor cost $ 100,000

Estimated direct labor hours 20,000 hours

Predetermined rate per direct labor hours $ 5 per direct labor hour

Actual hours used on a job 1,500 hours

Applied overhead based on the predetermined overhead

rate per direct labor hours

$ 5 per direct labor hours * 1,500 hours $ 7,500

The information regarding machine hours is not relevant to the requirements of the question.