Question

12 NWT Consultants, located in Yellowknife, Northwest Territories, is a small but growing business that analyzes a varlety of construction materials before they are used by contractors. The testing procedures are specific to the individual materials used because reagents used for testing react differently based on their composition and the quantity used. How they are introduced into the materials for testing is also important, During the month of December 2021, NWT completed 36 different jobs. Records pertaining to one such job (reference number: MT Q421-442) are as follows: 8.37 points Date 2/12/21 4/12/21 11/12/21 13/12/21 20/12/21 22/12/21 Document M-3316 L-4423 L-1437 M-3399 M-3407 L-4509 Amount $ 840 620 790 1,570 920 1,260 The documents with the references M and L pertain to direct materials and direct labour, respectively. NWT currently allocates overhead using direct labour cost as the allocation base. For the year 2021, it estimated $648,560 as the overhead amount and $484,000 for direct labour costs. Required: 1. Compute the overhead allocation rate for 2021. Predetermined overhead rate 2. Compute the total costs of the job. Amount Direct materials Direct labour Overhead

Answer 1

1.

Predetermined overhead rate

134 %

Predetermined overhead rate = $ 648,560 / $ 484,000 = 1.34

2.

Direct materials	$ 3,330
Direct labor	2,670
Overhead	3,577.80
Total cost	$ 9,577.80