Neptune Accounting Services expects its accountants to work for 24,000 direct labor hours per year.The company's estimated total indirect costs are $240,000.The direct labor rate is $75 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?

Question

Quizplus · Accepted Answer

First, we need to calculate the predetermined overhead rate using the given information:

Predetermined overhead rate = Total indirect costs / Estimated direct labor hours
Predetermined overhead rate = $240,000 / 24,000 hours
Predetermined overhead rate = $10 per direct labor hour

Now, we can calculate the indirect cost for the job:

Indirect cost = Predetermined overhead rate x Direct labor hours for the job
Indirect cost = $10 x 40 hours
Indirect cost = $400

Finally, we can calculate the total job cost:

Total job cost = Direct labor cost + Indirect cost
Total job cost = Direct labor rate x Direct labor hours for the job + Indirect cost
Total job cost = $75 x 40 hours + $400
Total job cost = $3,000 + $400
Total job cost = $3,400

Therefore, the best choice is C.

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