Abba Accounting expects its accountants to work a total of 24 000 direct labour hours per year. Abba's estimated total indirect costs are $240 000. The direct labour rate is $75 per hour. If Abba does a job requiring 40 hours of direct labour, what is the total job cost?

Question

Quizplus · Accepted Answer

The total job cost includes direct labor and allocated indirect costs. Direct labor cost is 40 hours * $75/hour = $3,000. Indirect cost rate is $240,000 / 24,000 hours = $10/hour. Indirect cost for the job is 40 hours * $10/hour = $400. Total job cost is $3,000 + $400 = $3,400.

Abba Accounting Expects Its Accountants to Work a Total of 24