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28 September, 08:45

Moran Company uses a job order cost system and has established a predetermined overhead application rate for the current year of 150% of direct labor cost, based on budgeted overhead of $900,000 and budgeted direct labor cost of $600,000. Job no. 1 was charged with direct materials of $36,000 and with overhead of $27,000. What is the total cost of job no. 1?

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  1. 28 September, 09:13
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    The aggregate cost of the Job No. 1 amounts to $81,000

    Explanation:

    The aggregate cost of the Job No. 1 is computed as:

    Aggregate cost = Direct material cost + Overhead cost + Direct labor cost

    where

    Direct material cost amounts to $36,000

    Overhead cost amounts to $27,000

    The Direct labor cost is computed as:

    150% of Direct labor cost = Pre-determined overhead are

    So,

    Direct labor cost = $27,000 / 150%

    Direct labor cost = $18,000

    Putting the values above:

    Aggregate cost = $18,000 + $36,000 + $27,000

    Aggregate cost = $81,000
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Home » Business » Moran Company uses a job order cost system and has established a predetermined overhead application rate for the current year of 150% of direct labor cost, based on budgeted overhead of $900,000 and budgeted direct labor cost of $600,000. Job no.
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