This problem continues the Piedmont Computer Company situation from Chapter 18. Piedmont Computer Company uses a job order costing system in which each batch manufactured is a different job. Piedmont Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $25 per hour. It allocates manufacturing overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs.
At the beginning of 2020, the controller prepared the following budget:
Manufacturing overhead .............................................. $ 290,000
Direct labor costs ..................................................... $ 1,160,000
In November 2020, Piedmont Computer Company worked on several jobs. Records for two jobs appear here:

Requirements
1. Compute Piedmont Computer Company's predetermined overhead allocation rate for 2020.
2. Compute the total cost of each job.
3. Why does Piedmont assign costs to jobs?

Transcribed Image Text:

Job 721 Job 722 Direct labor hours 780 hours 60 hours Direct materials $ 23,400 $ 2,500