Romano Company The following information pertains to Romano Company for September:

Direct Material Direct Labor Overhead

Job #323 $3,200 $4,500 ?

Job #325 ? 5,000 ?

Job #401 5,670 ? $5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401.The total cost of Jobs #323 and #325 is identical. Refer to Romano Company.What is the amount of direct materials for Job #325?

Question

Romano Company The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401.The total cost of Jobs #323 and #325 is identical. Refer to Romano Company.What is the amount of direct materials for Job #325?

Quizplus · Accepted Answer

The question does not give any information about the direct materials cost for Job #323, therefore we cannot calculate it. However, since the question states that the total cost of Jobs #323 and #325 is identical, we can use the information given for Job #325 to calculate its direct materials cost.

We know that overhead for Job #325 is applied at 150% of direct labor cost, which is $2,000 (given in the question). This means that the direct labor cost for Job #325 is $2,000/1.5 = $1,333.33.

We also know that overhead is applied to direct labor cost, so the total cost of Job #325 is 2.5 times the direct labor cost ($1,333.33 x 2.5 = $3,333.33).

To calculate the direct materials cost for Job #325, we subtract the direct labor cost from the total cost: $3,333.33 - $1,333.33 = $2,000.

Therefore, the amount of direct materials for Job #325 is $1,500 (given in answer B).

Romano Company The Following Information Pertains to Romano Company for September