Laudermilk produces dairy equipment. Most of its jobs have a number of units per

Question

Laudermilk 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 labor hour. Direct Labor wages average $8 an hour. Data for Job #3 for the year is:

Direct Materials        $40,000
Direct Labor Costs
Dept. A                     60,000
Dept. B                     12,000
Machine hours used
Dept. A                          200
Dept. B                       2,400
Units Produced           20,000




Compute the total cost of Job #3.

a. $229,000

b. $112,000

c. $134,600

d. $145,800

$231,600

Explanation / Answer

The Answer is A. $229,000. The Total cost equals direct labor plus direct materials plus overhead. DM = 40,000 DL = 72,000 (60,000 + 12,000) O/H = 117,000 (9,000 hours x $13 per hour) 40,000 + 72,000 + 117,000 = 229,000

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