roblem 2-18 (Algo) Job-Order Costing for a Service Company [LO2-1, LO2-2, LO2-3] peedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in ustomer vehicles, and its direct labor consists of the mechanics' hourly wages. Speedy's overhead costs include various items, s the shop manager's salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for th waiting room. The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the follow estimates: Direct labor-hours required to support estimated output Fixed overhead cost Variable overhead cost per direct labor-hour Saved Direct materials Direct labor cost Direct labor-hours used 32,000 $ 448,000 $ 1.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job: $609 $ 166 5 Compute Mr. Wilkes' total job cost. 3. If Speedy establishes its selling prices using a markup percentage of 50% of its total job cost, then how much would it have charge Mr. Wilkes?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Problem 2-18 (Algo) Job-Order Costing for a Service Company [LO2-1, LO2-2, LO2-3]
Speedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in
customer vehicles, and its direct labor consists of the mechanics' hourly wages. Speedy's overhead costs include various items, such
as the shop manager's salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the
waiting room.
Direct labor-hours required to support estimated output
Fixed overhead cost
Variable overhead cost per direct labor-hour
The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following
estimates:
Fnewconnect.mheducation.cc
32,000
$ 448,000
$1.00
Required:
1. Compute the predetermined overhead rate.
2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was
available with respect to his job:
$ 609
$ 166
5
Required 1
Saved
Direct materials
Direct labor cost
Direct labor-hours used
Compute Mr. Wilkes' total job cost.
3. If Speedy establishes its selling prices using a markup percentage of 50% of its total job cost, then how much would it have charged
Mr. Wilkes?
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