Sunrise Company provides building services. Each building job is different from the others and the company's accountant uses a job-order costing system to allocate costs to the different jobs. She uses direct labour hours as the basis for overhead allocation and estimates the following amounts for the year: Direct materials $ 14,720,000 Direct labour costs $ 8,200,000 Overhead $ 4,920,000 Direct labour hours 410,000 The accountant recorded the following data for the three jobs that Sunrise started and completed during the quarter. School Residential Cinema Direct Materials $2,944,000 $2,208,000 $4,416,000 Direct Labour Hours 68,000 34,000 17,000 Required: 1. Compute the predetermined overhead allocation rate for the year and apply overhead to the three jobs. (Round your "Predetermined overhead allocation rate" to 2 decimal places). 2. Compute the cost of each job. (Do not round intermediate calculations)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
5.
Sunrise Company provides building services. Each building job is different from the others and the company's accountant uses a
| Direct materials | $ | 14,720,000 | |
| Direct labour costs | $ | 8,200,000 | |
| Overhead | $ | 4,920,000 | |
| Direct labour hours | 410,000 | ||
The accountant recorded the following data for the three jobs that Sunrise started and completed during the quarter.
| School | Residential | Cinema | |
| Direct Materials | $2,944,000 | $2,208,000 | $4,416,000 |
| Direct Labour Hours | 68,000 | 34,000 | 17,000 |
Required:
1. Compute the predetermined overhead allocation rate for the year and apply overhead to the three jobs. (Round your "Predetermined overhead allocation rate" to 2 decimal places).
2. Compute the cost of each job. (Do not round intermediate calculations).
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