Neptune Accounting Services expects its accountants to work for 24,000 direct labor hours per year.The company's estimated total indirect costs are $233,000.The direct labor rate is $65 per hour.The company uses direct labor hours as the allocation base for indirect costs.If Neptune performs a job requiring 40 hours of direct labor,what is the total job cost? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

First, we need to calculate the predetermined overhead allocation rate:

Predetermined overhead allocation rate = Estimated total indirect costs / Estimated direct labor hours
= $233,000 / 24,000 hours
= $9.71 per direct labor hour

Next, we can calculate the indirect cost for the job requiring 40 direct labor hours:

Indirect cost = Predetermined overhead allocation rate x Direct labor hours
= $9.71 x 40
= $388.40

Finally, we can calculate the total job cost:

Total job cost = Direct labor cost + Indirect cost
= (Direct labor hours x Direct labor rate) + Indirect cost
= (40 hours x $65 per hour) + $388.40
= $2,600.40

Rounding to the nearest dollar, the answer is C) $2,988.

Neptune Accounting Services Expects Its Accountants to Work for 24,000