Company Eduard Manret made the following predictions for 2021:Factory overhead: $300,000Direct labor hours: 50,000Machine hours: 100,000Job A8 (started and completed in January) used 3,000 direct labor hours and 2,000 machine hours plus $57,000 of prime costs. If company overhead is applied based on machine hours, total cost for job A8 equals:Correct!
Question
Company Eduard Manret made the following predictions for 2021:Factory overhead: 57,000 of prime costs. If company overhead is applied based on machine hours, total cost for job A8 equals:Correct!
Solution
To calculate the total cost for job A8, we first need to determine the overhead rate. The overhead rate is calculated by dividing the total overhead costs by the total machine hours.
Step 1: Calculate the overhead rate Overhead rate = Total overhead costs / Total machine hours Overhead rate = 3 per machine hour
Next, we need to calculate the overhead cost for job A8. This is done by multiplying the overhead rate by the number of machine hours used for job A8.
Step 2: Calculate the overhead cost for job A8 Overhead cost = Overhead rate x Machine hours for job A8 Overhead cost = 6,000
Finally, we add the overhead cost to the prime cost to get the total cost for job A8.
Step 3: Calculate the total cost for job A8 Total cost = Prime cost + Overhead cost Total cost = 6,000 Total cost = $63,000
So, the total cost for job A8 is $63,000.
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