Question

Squire Corporation charged Job 110 with​ $14,000 of direct materials and​ $12,600 of direct labor. Allocation for manufacturing overhead is​ 70% of direct labor costs. What is the total cost of Job​ 110?

Answer 1

To get the answer I would add 14,000 materials plus 12600 of direct labour costs and 0.7 (12,600) or 8820 of manufacturing overhead for a total of $35,420 so that the total includes apparently all of the costs involved and then represents those 3 costs mentioned above.

Answer 2

The total cost of Job 110 = $ 35,420

Further explanation

Costs within a company can generally be categorized into 2 types of costs, namely fixed costs (FC) and variable costs (VC). Both of them, if added up to total cost (TC)

$\large{\boxed{\bold{TC=FC+VC}}}$

Fixed Cost is the production cost, the amount of which is not affected by production volume. So these costs remain even though the company does not produce

for example rental fees, taxes, insurance, loans, etc.

Variable costs are costs that vary according to the number of goods produced. The greater the production the greater the costs incurred

Example: raw material costs, direct labor, overhead costs

Raw material costs are in line with the number of finished goods produced

Direct labor costs are labor costs directly involved in the production process

Overhead costs are costs incurred outside the cost of raw materials and labor costs such as maintenance/repair costs

Squire Corporation charged Job 110 with

• direct material: $ 14,000
• direct labor: $ 12,600

• manufacturing overhead is 70% of direct labor costs:

= 70% x 12,600

= $ 8820

So the total cost (tc):

tc = direct material + direct labor + manufacturing overhead

tc = $ 14,000 + $ 12,600 + $ 8820

tc = $ 35420

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Keywords: total cost, the variable cost, fixed cost