In: Accounting
How are the costs of jobs calculated?
#1: Direct material cost of material used for that job is added.
#2: Direct labor cost incurred is also added.
#3: Indirect material, Indirect Labor, Factory Overheads are then applied to the job on the basis of certain predetermined Overhead rate.
These are form cost of the job.
In the given case, Cost of the job will be:
A |
Direct material cost |
$ 20,000.00 |
B |
Direct Labor cost |
$ 15,000.00 |
C = B x 150% |
Overheads applied |
$ 22,500.00 |
D = A+B+C |
Cost of the job |
$ 57,500.00 |