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a company operates a job costing system job number 1012 requires $45 of direct materials and $30 of direct labor. direct labor is paid at the rate of $7.50 per hour production o.h are absorbed at the rate of $12.50 per direct labor hours and non production o.h are absorbed at the rate of 60% of prime cost.
what is the total cost of job number 1012?
i wanted to ask you sir that in this question why is the examiner not multiplying direct labor which is 30 with its rate of paid which is 7.50 please explain
If the question has said that there were 30 hours of labour, then you would multiply 30 by $7.50.
However the question says that the labour is $30, so this must be the cost of the labour. (and when calculating overheads, it means that the number of labour hours must be 30/7.50 = 4 hours.)
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