Gill Manufacturing Uses a Predetermined Overhead Allocation Rate Based on a Percentage

question 12

Multiple Choice

Gill Manufacturing uses a predetermined overhead allocation rate based on a percentage of direct labor cost.At the beginning of the year,Gill estimated total manufacturing overhead costs at $1,010,000 and total direct labor costs at $840,000.In June,Gill completed Job 511.The details of Job 511 are shown below.(Round to 2 decimal places. ) $$\begin{array} { | l | r | } \hline \text { Direct materials cost } & \$ 23,500 \\\hline \text { Direct labor cost } & \$ 13,000 \\\hline \text { Direct labor hours } & 300 \text { hours } \\\hline \text { Units of product produced } & 500 \text { units } \\\hline\end{array}$$ How much was the total job cost of Job 511? (Round any percentages to two decimal places and your final answer to the nearest dollar. )

• A)$36,860
• B)$52,100
• C)$64,700
• D)$37,100

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Definitions:

Absorption Costing

An approach to pricing that involves including every manufacturing expense - like direct materials, direct labor, as well as fixed and variable overheads - in calculating the cost of a product.

Income Statement

A financial statement that reports a company’s financial performance over a specific accounting period.

Manufacturing Margin

The difference between the cost of goods produced and the sales revenue from those goods, indicating the profitability of manufacturing activities.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and contribute to profits.