Tillman Corporation uses a Job Order Costing system and has two production departments--Molding and Assembly. The company applies manufacturing overhead to production orders on the basis of direct labor costs. Separate departemental predetermined overhead rates are used. Budgeted manufacturing costs for the year are as follows: Annual Budget (Estimates) Molding Assembly Direct Materials $700,000 $100,000 Direct Labor $200,000 $800,000 Manufacturing Overhead $600,000 $400,000 If Job 432 reports $25,000 in direct materials and total direct labor of $20,000 ($8,000 in Molding and $12,000 in Assembly), what is the total cost for Job 432? A. $55,000
B. $65,000
C. $75,000
D. $50,000?

C. $75,000

Explanation:

Departmental OH Rate                Molding    Assembly

Direct Labor                                  200000    800000  

Manuf. OH                                     600000     400000  

Manuf. OH to Direct Labor Ratio300%50%

                                                                       Molding  Assembly  Total

Materials                                                                                           25000

Direct Labor                                                      8000       12000    20000

Applied Manuf. OH [Direct labor * OH Rate]   24000     6000     30000

Total cost for Job 432                                                                      75000

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