Session Corporation uses a job-order costing system with a single plantwide pred

Question

Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per direct labor-hour Recently, Job K913 was completed with the following characteristics: 70,000 $511,000 $ 2.10 Total direct labor-hours Direct materials Direct labor cost The total job cost for Job K913 is closest to: 150 $ 705 $4,650 O A. $6,060 B. $2,115 c. $5,355 D. $6,765

Explanation / Answer

Predetermined Overhead rate ( Fixed ) = Total Fixed Manufacturing Overhead Cost / Total Direct Labor Hours

= $ 511,000 / 70,000 Hours

= $ 7.30 Per Direct Labor Hour

Manufacturing Overhead = $ 7.30 Per Direct Labor Hour * 150 Direct Labor Hours + ( 150 Direct Labor Hours * $ 2.10)

= $ 1,410

Total Job Cost = Direct Materials Cost + Direct Labor Cost + Manufacturing Overhead

= $ 705 + $ 4,650 + $ 1,410

= $ 6,765

Hence, the correct answer is D. $ 6,765

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