Howard Corporation has a job order costing system. The following debits (credits) appear in the firm's work in process account for the month of June:
Overhead is applied at 90 per cent of direct labour cost. There is only one job still in process at the end of June, and this job has been charged with $2250 factory overhead. What was the amount of direct materials charged to that job?
A) $2250
B) $2500
C) $4250
D) $9000

Question

Howard Corporation has a job order costing system. The following debits (credits) appear in the firm's work in process account for the month of June: 
Overhead is applied at 90 per cent of direct labour cost. There is only one job still in process at the end of June, and this job has been charged with $2250 factory overhead. What was the amount of direct materials charged to that job?
A) $2250 
B) $2500 
C) $4250 
D) $9000

Quizplus · Accepted Answer

To determine the amount of direct materials charged to the job, we need to use the formula:

Total manufacturing costs = direct materials + direct labor + factory overhead

We are given that the job has been charged with $2250 factory overhead, and we know that overhead is applied at 90% of direct labor cost. Therefore, we can calculate the direct labor cost as follows:

Direct labor cost = factory overhead / 90% = $2250 / 0.9 = $2500

Now we can use the formula to solve for direct materials:

Total manufacturing costs = direct materials + direct labor + factory overhead

$11,000 = direct materials + $2500 + $2250

Direct materials = $11,000 - $2500 - $2250

Direct materials = $4250

Therefore, the amount of direct materials charged to the job is $4250, and the answer is choice C.

Howard Corporation Has a Job Order Costing System