Teasley Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on 70,000 machine-hours, total fixed manufacturing overhead cost of $630,000, and a variable manufacturing overhead rate of $3.40 per machine-hour. Job X159 was recently completed. The job cost sheet for the job contained the following data:?Total machine-hours200?Direct materials$670?Direct labor cost$7,800Required:Calculate the total job cost for Job X159.
What will be an ideal response?
Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $630,000 + ($3.40 per machine-hour × 70,000 machine-hours) = $630,000 + $238,000 = $868,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $868,000 ÷ 70,000 machine-hours = $12.40 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $12.40 per machine-hour × 200 machine-hours = $2,480
| ? | Direct materials | $670 |
| ? | Direct labor | 7,800 |
| ? | Manufacturing overhead applied | 2,480 |
| ? | Total cost of Job X159 | $10,950 |
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