Exercise 7-42 (Algo) Job Costing In a Service Organization (LO 7-4) Allocation Busters (A) is a dispute mediation firm offering services to firms in disputes about cost alocations with government agencies. For March, AB worked 451 hours for Massive Airfames and 672 hours for Gigantic Drydocks. AB bils clients at the rate of $503 per hour, labor cost for its professional staff is $210 per hour Overhead costs in March totaled $4750. Overhead is applied to clients at $41 per labor-hour in addition, AB had $199.800 in marketing and administrative costs. All transactions are on account. All services were biled Transaction Description (a) hecord Laboe cost te) (4) Record Applied Service overhead hecerd Cont ot services billed ecord Actual Bervice overbead Required: a. Show labor and overhead cost flows through T-accounts D. Prepare an income statement for the company for March Complete this question by entering your answers in the tabs below.

Exercise 7-42 (Algo) Job Costing In a Service Organization (LO 7-4) Allocation Busters (A) is a dispute mediation firm offering services to firms in disputes about cost alocations with government agencies. For March, AB worked 451 hours for Massive Airfames and 672 hours for Gigantic Drydocks. AB bils clients at the rate of $503 per hour, labor cost for its professional staff is $210 per hour Overhead costs in March totaled $4750. Overhead is applied to clients at $41 per labor-hour in addition, AB had $199.800 in marketing and administrative costs. All transactions are on account. All services were biled Transaction Description (a) hecord Laboe cost te) (4) Record Applied Service overhead hecerd Cont ot services billed ecord Actual Bervice overbead Required: a. Show labor and overhead cost flows through T-accounts D. Prepare an income statement for the company for March Complete this question by entering your answers in the tabs below.

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Job Order Costing

Section: Chapter Questions

Problem 17.3CP: Factory overhead rate Salvo Inc., a specialized equipment manufacturer, uses a job order costing...

See similar textbooks

Similar questions

Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What did the engineer mean about the large overhead rate being a disadvantage when plating bids and seeking new business?
(Appendix 4A) Journal Entries, Job Costs The following transactions occurred during the month of April for Nelson Company: a. Purchased materials costing 4,610 on account. b. Requisitioned materials totaling 4,800 for use in production, 3,170 for Job 518 and the remainder for Job 519. c. Recorded 65 hours of direct labor on Job 518 and 90 hours on Job 519 for the month. Direct laborers are paid at the rate of 14 per hour. d. Applied overhead using a plantwide rate of 6.20 per direct labor hour. e. Incurred and paid in cash actual overhead for the month of 973. f. Completed and transferred Job 518 to Finished Goods. g. Sold on account Job 517, which had been completed and transferred to Finished Goods in March, for cost (2,770) plus 25%. Required: 1. Prepare journal entries for Transactions a through e. 2. Prepare job-order cost sheets for Jobs 518 and 519. Prepare journal entries for Transactions f and g. (Note: Round to the nearest dollar.) 3. Prepare a schedule of cost of goods manufactured for April. Assume that the beginning balance in the raw materials account was 1,025 and that the beginning balance in the work-in-process account was zero.
JOB ORDER COSTING TRANSACTIONS D K Enterprises makes wicker baskets. During the month of August, the company had four job orders: 501, 502, 503, and 504. Overhead was applied at predetermined rates, while actual factory overhead was recorded as incurred. All four jobs were completed. (a) Purchased raw materials on account, 44,000. (b) Issued direct materials to production: (c) Issued indirect materials to production, 5,000. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 3,300. (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, 5,200. (g) Applied factory overhead to each of the jobs using a predetermined factory overhead rate as follows: (h) Finished Job Nos. 501-504 and transferred to the finished goods inventory account as products W, X, Y, and Z, respectively. (i) Sold products W, X, Y, and Z for 17,500, 18,000, 16,900, and 19,000, respectively. REQUIRED 1. Prepare general journal entries to record transactions (a) through (i). Make compound entries for (b), (d), and (g), with separate debits for each job. 2. Post the entries to the work in process and finished goods T accounts only.
JOB ORDER COSTING TRANSACTIONS Stonestreet Enterprises makes garage doors. During the month of February, the company had four job orders: 205, 206, 207, and 208. Overhead was applied at predetermined rates, while actual factory overhead was recorded as incurred. All four jobs were completed. (a) Purchased raw materials on account, 44,000. (b) Issued direct materials to production: (c) Issued indirect materials to production, 5,700. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 3,400. (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, 5,300. (g) Applied factory overhead to each of the jobs using a predetermined factory over-head rate as follows: (h) Finished Job Nos. 205-208 and transferred to the finished goods inventory account as products L, M, N, and O, respectively. (i) Sold products L, M, N, and O, on account, for 21,000, 20,300, 19,000, and 20,500, respectively. REQUIRED 1. Prepare general journal entries to record transactions (a) through (i). Make compound entries for (b), (d), and (g), with separate debits for each job. 2. Post the entries to the work in process and finished goods T accounts only.
JOB ORDER COSTING TRANSACTIONS Stonestreet Enterprises makes garage doors. During the month of February, the company had four job orders: 205, 206, 207, and 208. Overhead was applied at predetermined rates, while actual factory overhead was recorded as incurred. All four jobs were completed. (a) Purchased raw materials on account, 44,000. (b) Issued direct materials to production: (c) Issued indirect materials to production, 5,700. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 3,400. (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, 5,300. (g) Applied factory overhead to each of the jobs using a predetermined factory overhead rate as follows: (h) Finished Job Nos. 205208 and transferred to the finished goods inventory account as products L, M, N, and O. (i) Sold products L, M, N, and O, on account, for 21,000, 20,300, 19,000, and 20,500, respectively. REQUIRED 1. Prepare general journal entries to record transactions (a) through (i). 2. Post the entries to the work in process and finished goods accounts only.
Factory overhead rate Salvo Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead race is now 1,500 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has started the following: Our accounting system doesnt make any sense to me. It tells me that every labor hour carries an additional burden of 1,500. This means that direct labor makes up only 6% of our total product cost yet it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I wont be surprised if next year the rate is 2,000 per direct labor hour. Im also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30-minute error in our estimate of assembly time is worth 750. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. 1. What is the engineers concern about the overhead rate going up and up? 2. What did the engineer mean about the large overhead rate being a disadvantage when placing bids and seeking new business? 3. What do you think is a possible solution?
Exercise 7-42 (Algo) Job Costing in a Service Organization (LO 7-4) Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 445 hours for Massive Airframes and 678 hours for Gigantic Drydocks. AB bills clients at the rate of $508 per hour; labor cost for its professional staff is $200 per hour. Overhead costs in March totaled $40,740. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $199,800 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March.
Exercise 7-34 Job Costing in a Service Organization (LO 7-4) Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 452 hours for Massive Airframes and 662 hours for Gigantic Drydocks. AB bills clients at the rate of $509 per hour; labor cost for its professional staff is $220 per hour. Overhead costs in March totaled $40,930. Overhead is applied to clients at $45 per labor-hour. In addition, AB had $199,500 in marketing and administrative costs. All transactions are on account. All services were billed. Required: (a) Show labor and overhead cost flows through T-accounts. Do not give answer in image
Job Order Costing for a Service Company The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using job order costing. The following transactions occurred during August: Date Transaction August 3. Charged 410 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $180 per hour. 10. Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $16,600. 14. Charged 240 hours of professional time for the Shadow Creek trial at a rate of $290 per hour. 18. Received invoice from consultants Westerly and Henninger for $55,100 for expert testimony related to the Shadow Creek trial. 27. Applied office overhead at a rate of $80 per professional hour charged to the Shadow Creek case. 31. Paid administrative and support salaries of $36,900 for the month. 31. Used office supplies for the month, $12,500. 31. Paid professional salaries of $157,800 for the month. 31. Billed…
TB MC Qu. 7-43 (Algo) Pigot Corporation uses job costing and has... Pigot Corporation uses job costing and has two production departments, M and A. Budgeted manufacturing costs for the year are as follows: Dept. M Dept. A Direct materials $ 713,000 $ 113,000 Direct labor 213,000 826,000 Factory overhead 639,000 413,000 The actual direct materials and direct labor costs charged to Job. No. 432 during the year were as follows: Direct materials $ 48,000 Direct labor: Department M $ 21,000 Department A 25,000 46,000 Pigot applies manufacturing overhead to production orders on the basis of direct labor cost using departmental rates predetermined at the beginning of the year based on the annual budget. The total cost associated with Job. No. 432 for the year should be: Multiple Choice : A) $121,500. B $140,000. C) $123,500. D) $169,500.
4. Care Corp. uses a job order costing sytem. It has three production departments, X, Y, and Z. The Manufacturing cost budget for May is presented in Table 1. For Job No. 0198 which was completed in May, direct materials cost was P75,000 and direct labor cost are presented in Table 2. The Corporation applies manufacturing overhead to each job order on the basis of direct labor cost, using departmental rates predetermined at the beginning og the year based on the manufacturing cost budget.What is the total manufacturing cost of Job No. 0198 which was completed in May?
Job Order Costing for a Service Company The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using a job order costing. The following transactions occurred during August: Date Transaction August 3. Charged 160 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $200 per hour. 10. Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $13,000. 14. Charged 260 hours of professional time for the Shadow Creek trial at a rate of $185 per hour. 18. Received invoice from consultants Westerly and Henninger for $40,000 for expert testimony related to the Shadow Creek trial. 27. Applied office overhead at a rate of $70 per professional hour charged to the Shadow Creek case. 31. Paid administrative and support salaries of $34,800 for the month. 31. Used office supplies for the month, $3,500. 31. Paid professional salaries of $80,100 for the…