The Engineering Firm of Dobbs and Smith Uses a Job

question 16

Multiple Choice

The engineering firm of Dobbs and Smith uses a job order costing system to accumulate client-related costs. The overhead rate is 60% of direct labor cost. Staff engineer time is charged at a rate of $80 per hour. A recent job for a client involved 30 staff labor hours. How much was the total job cost?

• A) $1,600
• B) $2,400
• C) $3,840
• D) $360

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Definitions:

Break Even

The juncture where the aggregate of all costs matches the total income, leading to neither a profit nor a loss.

Short Run

A period of time during which at least one of a firm's inputs is fixed.

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust all inputs and achieve optimal operation.

Monopolistically Competitive

A market structure where many companies sell products that are similar but not identical, allowing for significant competition.