A company uses the Job Order cost system. Job #450 was started and completed in August. During August, Job #450 used $16,000 of direct materials, and $24,000 of direct labor. Overhead is applied to production at the rate of 120% of direct labor costs. What is the total cost of Job #450?

a. 84507
b. 548,000
c. 568,800
d. $44,800
e. $72,000

$68,800

Explanation:

Data provided

direct material = $16,000

Direct labor = $24,000

Production overhead = 120%

The computation of total cost of Job #450 is shown below:-

Total cost = Direct material + Direct labor + Production overhead

= $16,000 + $24,000 + (120% × $24,000)

= $16,000 + $24,000 + $28,800

= $68,800

Therefore for computing the total cost we simply added the direct material, direct labor and production overhead.

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