Allocation of Overhead PS. Byte Computer Company, a manufacturing organization,

Question

Allocation of Overhead PS. Byte Computer Company, a manufacturing organization, has just completed an order that Grater, Ltd., placed for 80 computers. Direct materials, purchased parts, and direct labor costs for the Grater order are as follows. Cost of direct materials 36,750 Cost of purchased parts 21,300 Direct labor hours Average direct labor pay rate $16 220 Overhead costs were applied at a single, plantwide overhead rate of 270 percent of direct labor dollars. REQUIRED Compute the total cost of the Grater order

Explanation / Answer

Answer.

Cost of Direct Materials = $36,750
Cost of Purchased Parts = $21,300

Cost of Direct Labor = Direct Labor hours * Average Direct Labor pay rate
Cost of Direct Labor = 220 * $16
Cost of Direct Labor = $3,520

Overhead Cost = 270% * Cost of Direct Labor
Overhead Cost = 270% * $3,520
Overhead Cost = $9,504

Total Cost = Cost of Direct Materials + Cost of Purchased Parts + Cost of Direct Labor + Overhead Cost
Total Cost = $36,750 + $21,300 + $3,520 + $9,504
Total Cost = $71,074

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