Simpson Company applies overhead on the basis of 200% of direct labor cost. Job No. 305 is charged with $150,000 of direct materials costs and $200,000 of manufacturing overhead. The total manufacturing costs for Job No. 305 is 1. $500,000 2. $550,000 3. $450,000 4. $350,000

Question

Business

Itzel

19 July, 13:24

Simpson Company applies overhead on the basis of 200% of direct labor cost. Job No. 305 is charged with $150,000 of direct materials costs and $200,000 of manufacturing overhead. The total manufacturing costs for Job No. 305 is 1. $500,000 2. $550,000 3. $450,000 4. $350,000

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Answers (1)

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Gunner Pearson · Answer 1

3. $450,000

Explanation:

The total manufacturing costs fo the Simpson company can be calculated using the following mentioned equation:

Total manufacturing costs=Direct material cost+Direct labour cost+Manufacturing overheads

In the given question

Direct material cost=$150,000

Direct labour cost=Manufacturing overheads/200%

=$200,000/200%

=$100,000

manufacturing overheads=$200,000

Total manufacturing costs=$150,000+$100,000+$200,000

=$450,000

So based on the above calculations, the answer is 3. $450,000