The Brinker Company uses a job order costing system at its local plant. The plan

Question

The Brinker Company uses a job order costing system at its local plant. The plant has a machine department and a finishing department. The company uses machine hours to allocate machining department support costs to jobs and uses direct labor costs to allocate finishing department support to jobs. Estimates for 2006 are as follows:
Machining department Finishing Department
Manufacturing Support Cost $350,000 $280,000
Machine hours 14,000 1,400
Direct labor hours 3,500 15,400
Direct labor costs 105,000 350,000

Questions:
a) Determine the cost driver rate for each department.
b) During September 2006, cost records for job 101 show the following:


Machining Department Finishing Department
Direct material costs $8,000 $1,400
Direct labor cost 250 800
Direct labor hours 7 35
Machine hours 50 6

Determine the total cost charged to job 101 in September.

Explanation / Answer

a) Machining dept ($350,000/14,000)= $25 per machine hour Finishing dept ($280,000/$350,000) $0.80 per direct labor $. b) Machining dept (50*$25)= $1,250 Finishing dept ($800* $0.80)= $640.

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