Elliott Company uses a predetermined overhead rate based on

Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501:

Direct materials used.......................................................

$4,200

Direct labor-hours worked..............................................

300

Direct labor rate per hour................................................

$8.00

Machine-hours used........................................................

200

Predetermined overhead rate per machine-hour..............

$15.00

What is the total manufacturing cost recorded on Job 1501?

$8,800

$9,600

$10,300

$11,100

Solution

Total overhead=Predetermined overhead rate*Machine hours

=(15*200)=$3000

Direct labor=(Direct labor-hours worked*Direct labor rate per hour)

=(300*8)=$2400

Hence total manufacturing cost=Direct materials used+Direct labor+Total overhead

=$(4200+2400+3000)

which is equal to

=$9600.