Griffin Manufacturing uses job order costing to measure and track the costs incurred for specific jobs.While most of the jobs do require some machine time,Griffin has determined that direct labour cost drives its manufacturing overhead costs.During the month of August,the following data were available for Job #45:
$$\begin{array} { l l }
\text { Direct labour } & \text { 200 hours at } \$15 \text { per hour } \
\text { Direct materials } & 90 \text { gallons at } \$ 6 \text { per gallon } \
\text { Machine hours used } & 100 \text { hours }
\end{array}$$
If total overhead costs during the month totalled $4000 when a total of $20 000 in direct labour costs were incurred,what will be the total manufacturing cost of Job #45?

Question

Griffin Manufacturing uses job order costing to measure and track the costs incurred for specific jobs.While most of the jobs do require some machine time,Griffin has determined that direct labour cost drives its manufacturing overhead costs.During the month of August,the following data were available for Job #45:
$$\begin{array} { l l } 
\text { Direct labour } & \text { 200 hours at } \$15 \text { per hour } \
\text { Direct materials } & 90 \text { gallons at } \$ 6 \text { per gallon } \
\text { Machine hours used } & 100 \text { hours }
\end{array}$$
If total overhead costs during the month totalled $4000 when a total of $20 000 in direct labour costs were incurred,what will be the total manufacturing cost of Job #45?

Quizplus · Accepted Answer

The total manufacturing cost of Job #45 includes direct labor, direct materials, and allocated overhead costs. Direct labor cost for Job #45 is 200 hours at $15 per hour, totaling $3000. Direct materials cost is 90 gallons at $6 per gallon, totaling $540. To find the overhead allocated to Job #45, we use the overhead rate, which is based on direct labor cost. The total overhead costs are $4000, and the total direct labor costs are $20,000, giving an overhead rate of $4000 / $20,000 = 0.20 or 20%. The overhead allocated to Job #45 is 20% of its direct labor cost, which is 0.20 * $3000 = $600. Adding these costs together gives $3000 (direct labor) + $540 (direct materials) + $600 (overhead) = $4140.

Griffin Manufacturing Uses Job Order Costing to Measure and Track