Question
1. ABC Home Builders uses a job order cost system and applies overhead on the basis of direct labor hours. The company estimates that they
1. ABC Home Builders uses a job order cost system and applies overhead on the basis of direct labor hours. The company estimates that they will incur $1,000,000 of overhead costs this year and will use $20,000 direct labor hours. What is their predetermined overhead allocation rate?
2. ABC Home Builders' job cost sheet for Job 25 included $20,000 of direct materials and 800 direct labor hours. Direct labor pay rates average $20 per hour. Using the predetermined overhead allocation rate computed in #1 above, what is the total cost of Job 25?
3. Assume ABC Home Builders priced jobs 30% above cost, what would be the price of Job 25?
4. How much gross profit did ABC earn on Job 25?
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