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17 September, 11:30

Dougan, Inc. allocates overhead based on a predetermined overhead rate of $2.40 per direct labor hour. Employees are paid $12.00 per hour. Job 24 requires 4.2 pounds of direct materials at a cost of $15.00 per pound. Employees worked a total of 17.5 hours to complete the job. Actual manufacturing overhead costs totaled $80,000 for the year for the company. How much is the cost of Job 24?

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  1. 17 September, 12:35
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    Answer: Cost of Job 24 = $315

    Explanation:

    Given that,

    Overhead rate = $2.40 per direct labor hour

    Employees are paid = $12.00 per hour

    Job 24 requires = 4.2 pounds of direct materials and cost per pound = $15.00

    Total hours employees worked for completing a job = 17.5

    Actual manufacturing overhead costs for the year = $80,000

    Hence,

    Direct Labor = Employees are paid * Total hours employees worked for completing a job

    = $12 * 17.5 hours

    = $210

    Direct Material = 4.2 pounds of direct materials * cost per pound

    = 4.2 * $15

    = $63

    Manufacturing overhead = Total hours employees worked for completing a job * Overhead rate

    = 17.5 * $2.40

    = $42

    Therefore,

    Cost of Job 24 = Direct Labor + Direct Material + Manufacturing overhead

    = $210 + $63 + $42

    = $315
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