Neptune Accounting Services expects its accountants to work for 26 comma 000 direct labor hours per year. The company's estimated total indirect costs are $ 221 comma 000. The direct labor rate is $ 70 per hour. The company uses direct labor hours as the allocation base for indirect costs. If Neptune performs a job requiring 30 hours of direct labor, what is the total job cost?

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Business

Bentley Rogers

12 September, 14:23

Neptune Accounting Services expects its accountants to work for 26 comma 000 direct labor hours per year. The company's estimated total indirect costs are $ 221 comma 000. The direct labor rate is $ 70 per hour. The company uses direct labor hours as the allocation base for indirect costs. If Neptune performs a job requiring 30 hours of direct labor, what is the total job cost?

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Augustus Lin · Answer 1

Total job cost = $2,355

Explanation:

The overheads would be charged to the job using an overhead absorption rate determined using the labour hours.

The overhead absorption rate = Estimated overhead/Estimated labour hours

=$221,000/26,000 hours

=$8.5 per hour

Total cost of jobs = Direct labour cost + Indirect coat

= ($70 * 30) + (8.5 * 30)

=$2,355