Nature's Best Milk
Nature's Best Milk produces dairy equipment. Most of its jobs have a number of units per job. The company has two different departments through which all jobs pass. Overhead is applied using a plantwide rate of $13 per direct labour hour. Direct labour wages average $8 an hour. Data for Job 3 for the year are as follows: $$\begin{array} { l r }
\text { Direct Materials } & \$ 50,000 \
\text { Direct Labour Costs } & \
\text { Dept. A } & 60,000 \
\text { Dept. B } & 12,000 \
\text { Machine hours used } & \
\text { Dept A } & 200 \
\text { Dept. B } & 2,400 \
\text { Units Produced } & 20,000
\end{array}$$
-Refer to Nature's Best Milk. What is the total cost of Job 3?

Question

Nature's Best Milk
Nature's Best Milk produces dairy equipment. Most of its jobs have a number of units per job. The company has two different departments through which all jobs pass. Overhead is applied using a plantwide rate of $13 per direct labour hour. Direct labour wages average $8 an hour. Data for Job 3 for the year are as follows: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 50,000 \
\text { Direct Labour Costs } & \
\text { Dept. A } & 60,000 \
\text { Dept. B } & 12,000 \
\text { Machine hours used } & \
\text { Dept A } & 200 \
\text { Dept. B } & 2,400 \
\text { Units Produced } & 20,000
\end{array}$$
-Refer to Nature's Best Milk. What is the total cost of Job 3?

Quizplus · Accepted Answer

The total cost of Job 3 includes direct materials, direct labour, and applied overhead. Direct materials are $50,000. Direct labour costs are $60,000 (Dept. A) + $12,000 (Dept. B) = $72,000. Total direct labour hours are $72,000 / $8 per hour = 9,000 hours. Overhead is $13 per direct labour hour, so overhead is 9,000 hours * $13 = $117,000. Total cost = $50,000 + $72,000 + $117,000 = $239,000.

Nature's Best Milk Nature's Best Milk Produces Dairy Equipment -Refer to Nature's Best Milk

Nature's Best Milk
Nature's Best Milk Produces Dairy Equipment -Refer to Nature's Best Milk