Meger Manufacturing uses the direct labor cost method for applying factory overhead to production. The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively. During the year, the company started and completed Job 352A, which had direct material and labor costs of $32,000 and $45,000, respectively. What was the cost of Job 352A? A. $77,000 B. $102,600 C. $113,000 D. $81,000

Question

Slade

Business

26 May, 05:15

Meger Manufacturing uses the direct labor cost method for applying factory overhead to production. The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively. During the year, the company started and completed Job 352A, which had direct material and labor costs of $32,000 and $45,000, respectively. What was the cost of Job 352A? A. $77,000 B. $102,600 C. $113,000 D. $81,000

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Answers (1)

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Jenna Barton · Answer 1

The correct answer is C.

Explanation:

Giving the following information:

The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively.

Job 352A

Direct material = $32,000

Labor costs = $45,000

First, we need to calculate the predetermined manufacturing overhead rate:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 800,000/1,000,000 = $0.8 per direct labor dollar

Now, we can calculate the total cost:

Total cost = direct material + direct labor + allocated MOH

Total cost = 32,000 + 45,000 + (0.8*45,000) = $113,000