Question

Lupo 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 the following data:

Total machine-hours		30,200
Total fixed manufacturing overhead cost	$	120,800
Variable manufacturing overhead per machine-hour	$	6

Recently, Job T687 was completed with the following characteristics:

Number of units in the job		10
Total machine-hours		40
Direct materials	$	710
Direct labor cost	$	1,410

The total job cost for Job T687 is closest to:

Answer 1

Correct answer---$2,520

Working

calculation of Plantwide overhead rate
(A)	Total Overheads	$                120,800.00
(B)	Total Machine hours	30200
(A/B)	Plantwide overhead rate	$                             4.00

Job Cost of JOB T687
Direct material		$     710.00
Direct labor		$ 1,410.00
Variable manufacturing overheads	($6 x 40)	$     240.00
Fixed manufacturing overheads	($4 x 40)	$     160.00
Total Cost		$ 2,520.00