Neil Company uses a job order cost system and has established a predetermined overhead application rate for the current year of 150%, based on budgeted overhead of $900,000 and budgeted direct labor cost of $600,000. Job no. 1 was charged with direct materials of $20,000 and with overhead of $18,000. The total cost of job no. 1:
A. Is $38,000.
B. Is $50,000.
C. Is $65,000.
D. Cannot be determined without additional information.
Answer:B
Neil Company uses a job order cost system and has established a predetermined overhead application rate for the current year of 150%, based on budgeted overhead of $900,000 and budgeted direct labor cost of $600,000. Job no. 1 was charged with direct materials of $20,000 and with overhead of $18,000. The total cost of job no. 1:
A. Is $38,000. B. Is $50,000. C. Is $65,000. D. Cannot be determined without additional information.