Wilson Products computes its predetermined overhead rate on the basis of direct labor-hours. Direct material and direct labor associated with Job X23 are $4,000 and $1,200 respectively. The company uses a predetermined overhead rate of $10 per direct labor-hour. If Job X23 involved 100 hours of actual direct labor, what is the total cost associated with the job?

Total cost = $6,200

Explanation:

Giving the following information:

Job X23:

Direct material = 4,000

Direct labor = $1,200

The company uses a predetermined overhead rate of $10 per direct labor-hour. Job X23 involved 100 hours of actual direct labor.

First, we need to allocate overhead:

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Allocated MOH = 10*100 = $1,000

Now, we can calculate the total cost:

Total cost = 4,000 + 1,200 + 1,000 = $6,200