Jinnah Company applies overhead on the basis of 200% of direct labor cost. Job No. 501 is charged with $240000 of direct materials costs and $320000 of manufacturing overhead. The total manufacturing costs for Job No. 501 is

Question

Quizplus · Accepted Answer

- The formula to calculate manufacturing costs is:
Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
- We know Direct Materials costs is $240,000
- We don't know Direct Labor costs, but we know that Manufacturing Overhead is charged at 200% of Direct Labor costs. We can use this information to find the Direct Labor cost:
Manufacturing Overhead = 200% x Direct Labor
$320,000 = 2 x Direct Labor
Direct Labor = $160,000
- To find the total manufacturing costs for Job No. 501, we can apply the formula:
Manufacturing Costs = $240,000 + $160,000 + $320,000
Manufacturing Costs = $720,000
Therefore, the best choice is C, with an explanation as shown above.

Jinnah Company Applies Overhead on the Basis of 200% of Direct