In a job costing system, the target cost for a job is calculated as:

• A. Total sales revenue expected from the job
• B. The sum of all indirect costs incurred during the period
• C. The difference between actual and budgeted costs for all jobs
• D. Estimated direct materials, direct labor, and applied overhead assigned to the job

Answer: (D)

Verified step by step guidance

1. Understand the concept of job costing: In a job costing system, costs are assigned to specific jobs or projects. The target cost for a job is calculated based on the estimated direct materials, direct labor, and applied overhead assigned to the job.
2. Step 1: Identify the direct materials required for the job. Direct materials are the raw materials that can be directly traced to the job. Estimate the cost of these materials based on the quantity and price per unit.
3. Step 2: Determine the direct labor costs. Direct labor refers to the wages paid to workers who are directly involved in completing the job. Calculate the cost by multiplying the number of hours worked by the hourly wage rate.
4. Step 3: Calculate the applied overhead. Overhead costs are indirect costs that cannot be directly traced to a specific job, such as utilities, rent, and administrative expenses. These costs are applied to the job using a predetermined overhead rate, which is typically based on direct labor hours or machine hours.
5. Step 4: Add the estimated direct materials, direct labor, and applied overhead to calculate the target cost for the job. This sum represents the total estimated cost assigned to the job.