Collini Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: During the current month the company started and finished Job T268. The following data were recorded for this job:
The total job cost for Job T268 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $2,595
B) $616
C) $4,831
D) $2,236

Question

Collini Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:  During the current month the company started and finished Job T268. The following data were recorded for this job:
 The total job cost for Job T268 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $2,595 
B) $616 
C) $4,831 
D) $2,236

Quizplus · Accepted Answer

To compute the total cost of Job T268, we need to determine the total amount of overhead applied to the job in each department as well as the total direct materials and direct labor costs.

In the Machining Department:
- Machine-hours used for Job T268 = 9
- Predetermined overhead rate = $15 per machine-hour
- Overhead applied = $15 x 9 = $135

In the Customizing Department:
- Direct labor-hours used for Job T268 = 16
- Predetermined overhead rate = $20 per direct labor-hour
- Overhead applied = $20 x 16 = $320

Total direct materials cost for Job T268 = $1,200
Total direct labor cost for Job T268 = $920

Therefore, the total job cost for Job T268 is:
Total cost = Direct materials + Direct labor + Overhead
Total cost = $1,200 + $920 + $455
Total cost = $2,575

The closest option is C) $4,831.

Collini Corporation Has Two Production Departments, Machining and Customizing