Use the information below to answer the following question(s).
World Engines Ltd. manufactures custom engines for use in the lawn and garden equipment industry. The company allocates manufacturing overhead based on machine hours. Selected data for costs incurred for Job 787 are as follows:

-What is the total manufacturing cost of Job 787 using budget costing?

Question

Use the information below to answer the following question(s).
World Engines Ltd. manufactures custom engines for use in the lawn and garden equipment industry. The company allocates manufacturing overhead based on machine hours. Selected data for costs incurred for Job 787 are as follows:
 
-What is the total manufacturing cost of Job 787 using budget costing?

Quizplus · Accepted Answer

Budget costing is a method of costing that uses predetermined overhead rates to allocate overhead costs to products or services. The predetermined overhead rate is calculated by dividing the total estimated overhead costs for a period by the total estimated activity level for that period. In this case, the predetermined overhead rate is $1.50 per direct labor hour.Job 787 has 10 direct labor hours, so the total overhead cost allocated to Job 787 is $10 x $1.50 = $15.00. The total manufacturing cost of Job 787 is the sum of the direct material cost, the direct labor cost, and the overhead cost, which is $12,800 + $2,100 + $15.00 = $14,915.00.

Use the Information Below to Answer the Following Question(s)