desperately need help managerial accounting question, will give best rating immediately

Question

The Raleigh Company is located in North Carolina and uses predetermined overhead rates to apply manufacturing overhead costs to jobs. The predetermined overhead rate is based on machine hours in Department A and direct labor costs in Department B. At the beginning of the year, the company made the following estimates :

Dept A : Direct Labor Cost : $65,000 Dept B : $40,000

Dept A : Manufacturing Overhead : $87,000 Dept B : $50,000

Dept A : Direct Labor Hours : 8,000 Dept B : 10,000

Dept A : Machine Hours : 3,000 Dept B : 12,000

Raleigh recently received an order from a company in Vermont. The expected cost of this job is :

Dept A : Direct Materials : $10,000 Dept B : Direct Materials : $700

Dept A: Direct Labor Cost : $7,000 Dept B: $3,500

Dept A : Direct Labor Hours : 500 Dept B: 600

Dept B : Machine Hours : 100 Dept B : 435

Question : What is the estimated total cost of this job?

A) 7275.00 B) 28,475.00 C) 10,500.00 D) 10,700.00

Please show help with steps and answer.

Answer 1

The answer is B or $28,475.

The predetermined O/H rate for dept A = 29 (87000divided by 3000)

The predetermined O/H rate for dept B= 1.25% of D/L

 

Job cost for Dept A:

DM  $10,000

DL     7,000

OH    2,900 (29x100 machine hrs)

Total = 19,900

Job Cost for dept b:

DM      700

DL     3,500

OH    4,375

Total= 8,575      Total estimated cost = 28,475