37 JKL Company uses the machine hour method to apply factory

37. JKL Company uses the machine hour method to apply factory overhead and the predetermined overhead rate is $15 per hour. What is the amount that should be charged to Job 1516 for factory overhead? What would be the total cost of the job? Assume that direct materials used total $4,000; direct labor is $1,900; direct labor hours are 125; and machine hours are 150.

Solution

Apply overhead charge for factory overhead = 15*150 = $2250

Calculate total cost of job :

Direct material	4000
Direct labour	1900
Applied overhead	2250
Total cost of job	8150