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 calculate 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 know from the question that the job has been charged with $2250 factory overhead and that overhead is applied at 90% of direct labor cost. Therefore, we can calculate the total manufacturing costs for the job as follows:

Total Manufacturing Costs = (Direct Labor Cost / 0.9) + $2250

We are not given the direct labor cost, but we are given the total amount of direct labor hours worked, which is 350. We also know from the question that the direct labor rate is $12 per hour. Therefore, we can calculate the direct labor cost as follows:

Direct Labor Cost = Direct Labor Hours x Direct Labor Rate
Direct Labor Cost = 350 x $12
Direct Labor Cost = $4200

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

Total Manufacturing Costs = Direct Materials + Direct Labor + Factory Overhead
$13,000 = Direct Materials + $4200 + $2250
Direct Materials = $13,000 - $4200 - $2250
Direct Materials = $6550

Therefore, the amount of direct materials charged to the job is $6550, which is answer choice C.

Howard Corporation Has a Job Order Costing System