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A marketing consultant uses the job costing system and has a pre-determined overhead rate of $15 per direct labor hour. This amount is based on an estimated overhead of $30,000 and an average time of 5.0 hours per job. Job #521 incurred direct material costs of $50 and 6 direct labor hours costing of $75 per hour. The total cost of job #521 is_.
A. $155.
B. $215.
C. $565.
D. $590

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Answer:

D. $590

Explanation:

Predetermined overhead rate = $15 per labour hour

Direct Material cost = $50

Labor rate = $75 per hour

Number of Direct labor hour = 6

Direct labor cost = 6 x 75 = $450

Overhead applied cost = Predetermined overhead rate x Direct labor hours

Overhead applied cost = 15 x 6 = $90

Total cost = $50 + $450 + $90

Total cost = $590

So, the correct answer is D. $590

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