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17 September, 08:31

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?

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  1. 17 September, 10:32
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    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
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