The records at Smith and Jones, Inc. show that Job 110 is charged with $10,000 of direct materials and $13,000 of direct labor. Smith and Jones, Inc. allocate manufacturing overhead at 85% of direct labor cost. What is the total cost of Job No. 110?

$34,050

Explanation:

The total job cost consist of the direct and indirect cost (also known as overheads). The direct cost includes the cost of direct materials, direct labour, direct machine hours etc.

While the manufacturing overheads consist of indirect labour cost, depreciation, etc.

Total Direct costs = $10,000 + $13,000

= $23,000

If the allocate manufacturing overhead at 85% of direct labor cost

Manufacturing overheads = 85% × $13,000

= $11,050

The total cost of Job No. 110

= $23,000 + $11,050

= $34,050

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