Basis of direct labor cost

Reference no: EM13951300

Job costing The Gonzalez Company uses a job order costing system at its plant in Green Bay, Wisconsin. The plant has a machining department and a finishing department. The company uses two cost driver rates for allocating manufacturing overhead costs to job orders: one on the basis of machine hours for allocating machining department overhead costs and the other on the basis of direct labor cost for allocating the finishing department overhead costs. Estimates for the current year follow:

	MACHINING DEPARTMENT	FINISHING DEPARTMENT
Manufacturing overhead cost	$500,000	$400,000
Machine hours	20,000	2,000
Direct labor hours	5,000	22,000
Direct labor cost	$150,000	$500,000

Required

(a) Determine the two departmental cost driver rates.

(b) Last month, cost records for job 511 show the following:

	MACHINING DEPARTMENT	FINISHING DEPARTMENT
Direct materials cost	$12,000	$2,000
Direct labor cost	$300	$1,200
Direct labor hours	10	50
Machine hours	80	8

Determine the total costs charged to job 511.

Reference no: EM13951300

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