company has the following transactions during the week:purchase of $4,000 raw materials assignment of $800 of...

company has the following transactions during the week:purchase of $4,000 raw materials assignment of $800 of raw materials inventory to job 8 payroll for 10 hours or $3,300 is attributed to job 8 factory rent of $6,750 payroll of $2,300 attributed to job 7 overhead is applied based on direct labor hours (dlh) at a rate of $200 per dlh.what is the cost of job 8?

Expert Solution

Job costing is the method of costing (maintenance of cost records) according to each job performed (for eg - cost of servicing a car is maintained separately for each car in a Car service unit). When the cost are directly identified with the job they are directly allocated while other common cost are allocated on the basis of a suitable criteria such as machine hours or labour hours.

Direct material cost is taken at $800 since the material that is issued to Job 8 is at this value. Material purchase at $4000 is irrelvant under Job costing.

Direct labour is taken at $3,300 as given.

Overhead (which include factory rent and other payroll) are allocated on the basis of direct labour hours which is 10 hours at the rate of $200 = $2000. Overheads are those cost which are not directly attributable to a single job such as admin and other cost which is therefore allocated to jobs on some suitable basis.

Therefore the total cost is $6,100

Note: It is assumed that the Job 7 in third line of question is a typo.

ekkarill92 answered 2 years ago

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