Edwards Computer Repair treats each repair order as a job Ov

Edwards Computer Repair treats each repair order as a job. Overhead is allocated based on the cost of technician time. At the start of the year, annual technician wages were estimated to be $660,000, and company overhead was estimated to be $501,600.

(b)

Suppose a job required parts costing $390 and technician time costing $195. What would be the total cost of the job? (Round overhead rate to 3 decimal places, e.g. 1.251 and final answer to 2 decimal places, e.g. 15.25.)

Total job cost $

Solution

First of all let’s calculate overhead rate;

Total estimated overhead costs = $501600

Annual technician wages = $660000

Thus formula for caculating overhead rate will be as follow;

Overhead rate = (Total estimated overhead costs / Annual technician wages)

Overhead rate ($501600 / $660000) = $0.76

Now let’s calcuate overhead costs for the job ($0.76 * $195) = $148.20

Now let’s calculate total job cost;

($390+ $195 + $148.20) = $733.20