Question

Crane Fabrication allocates manufacturing overhead to each job using departmental overhead rates. Crane's operations are divided into a metal casting department and a metal finishing department. The casting department uses a departmental overhead rate of $51 per machine hour, while the finishing department uses a departmental overhead rate of $25 per direct labor hour. Job A216 used the following direct labor hours and machine hours in the two departments: Actual results Casting Department Finishing Department Direct labor hours used 8 14 Machine hours used 3 6The cost for direct labor is $42 per direct labor hour and the cost of the direct materials used by Job A216 is $2000. What was the total cost of Job A216 if Crane Fabrication used the departmental overhead rates to allocate manufacturing overhead? $2378 $2924 $3427 $3682

Answer 1

The correct answer is $ 3427

Calculation and explanation

In order to calculate the total cost of job A216, we have to prepare the following statement

   Statement for calculation of total cost of Job A216

Direct Material $ 2000

Direct Labour(42 ×22) $ 924

Casting department overheads (3×51) $ 153

Finishing department overheads ( 25× 14) $ 350

Total cost of Job A 216 $ 3427