Question

If a question asks for the total job cost or total manufacturing cost of a job, which components should that include?

Job Cost Record for Company using ABC:

A) Manufacturing Overhead traced like always.

B) Direct Materials calculated using ABC steps.

C) Manufacturing Overhead allocated using only one allocation rate.

D) Direct Labor calculated using the ABC steps.

E) Direct Labor amount traced like always(DL Hours*DL Wage Rate)

F) Direct Materials amount traced like always.

G) Manufacturing Overhead allocated from EACH activity.

Answer 1

Job costing is the cost allocating method, Each Job requires different amounts of Materials, Labor and Overhead i.e., Total Job Cost = Direct Material + Direct Labor + Overheads Applied.

Direct Materials are calculated based on amount of materials used in the specific Job.

Direct Labor cost is calculated using rate per hour and how many hours required to complete the Job.

Manufacturing Overheads are calculated using allocation basis by calculating overhead rate for each activity as Estimated Overheads / Estimated activity.

So from the above explanation,

Components should be include in the Job cost record for company using ABC

E) Direct Labor amount traced like always(DL Hours*DL Wage Rate)

F) Direct Materials amount traced like always.

G) Manufacturing Overhead allocated from EACH activity.

Note : Please comment down for any further clarifications.