1.
Concept introduction:
Mr. F’s estimated cost of the architectural job.
2.
Concept introduction:
Job costing: Job costing refers to the method of costing which is based on a particular project where all the costs and revenues are being tracked for every project or job. Here, all the costs like direct material, direct labor, and overheads are separately written down, and then important decisions and assumptions are made.
The expected profit if Mr. F bids $285,000 price for the job.
3.
Concept introduction:
Job costing: Job costing refers to the method of costing which is based on a particular project where all the costs and revenues are being tracked for every project or job. Here, all the costs like direct material, direct labor, overheads, etc are separately written down, and then important decisions and assumptions are made.
The bid price at which Mr. F will earn a profit of $80,000.
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- Job order cost accounting for a service company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 65% of media purchases. On August 1, the four advertising projects had the following accumulated costs: During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. Journalize the summary entry to record each of the following for the month: A. Direct labor costs B. Media purchases C. Overhead applied D. Completion of Vault Bank and Take Off Airlines campaignsarrow_forwardKelso Manufacturing allocates manufacturing overhead using a single predetermined rate based on a planned use of 15,000 direct labour hours per year. Company leadership recently learned that its costing system may be too simple for its operations, and that job cost fairly inaccurate. A consultant was hired to study overhead costs, and the following information reflects the cost pools and activity rates that were determined: Cost Pool Total Cost Activity Rate Purchasing $90,000 $30/purchase order Assembly $150,000 $?/direct labour hour Inspection $60,000 $15/inspection Production $150,000 $3/unit produced $450,000 Total Based on the information presented in the introduction and table above, Kelso's single predetermined manufacturing overhead cost rate is __________ and its rate for the Assembly cost pool is __________ Question 8 a. $30/direct labour hour; $30/direct labour hour b. $30/direct labour hour; $10/direct labour hour C. $30/direct labour hour; $15/direct labour hour d.…arrow_forwardYour Company uses activity-based costing and has estimated its costs for next year in the table below. How much of these costs would the company assign to activity cost pools? Direct labor $50,000 Salary of receptionist for headquarters $35,000 operation Sales commission $95,000 Plant manager's salary $150,000 Depreciation on manufacturing plant $65,000 equipment Salary of president's secretary $38,000 $288,000 $215,000 $433,000 $ 73,000arrow_forward
- Department costing, service company. DLN is an architectural rm that designs and builds buildings. It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $8,100,000. DLN’s simple costing system allocates overhead costs to its jobs based on number of jobs. There were three jobs in 2017. One customer, Chandler, has complained that the cost and price of its building in Chicago was not competitive. As a result, the controller has initiated a detailed review of the overhead allocation to determine if overhead costs should be charged to jobs in proportion to consumption of overhead resources by jobs. She gathers the following information:arrow_forwardCrystal Fabrication allocates manufacturing overhead using a single predetermined rate based on a planned use of 10,000 direct labour hours per year. Company leadership recently learned that its costing system may be too simple for its operations, and that job costs may be fairly inaccurate. A consultant was hired to study overhead costs, and the following information reflects the cost pools and activity rates that were determined: Cost Pool Total Cost Purchasing $96,000 Setups $50,000 Assembly $150,000 Inspections $80,000 Total $376,000 Activity Rate $48/purchase order $80/production run $15/direct labour a. $2,000; $5,000 O b. $3,000; $2,760 O c. $150,000; $376,000 d. $7,520; $5,760 hour $20/inspection Job #650 required 20 purchase orders, 200 direct labour hours, 15 production runs, and 30 inspections. The allocated overhead using a traditional job-costing system is using an activity-based costing system. andarrow_forwardCrystal Fabrication allocates manufacturing overhead using a single predetermined rate based on a planned use of 12,000 direct labour hours per year. Company leadership recently learned that its costing system may be too simple for its operations, and that job costs may be fairly inaccurate. A consultant was hired to study overhead costs, and the following information reflects the cost pools and activity rates that were determined: Cost Pool Total Cost Purchasing $60,000 Setups $40,000 Assembly $180,000 Inspections $80,000 Total $360,000 Activity Rate $48/purchase order $80/production run $15/direct labour a. Undercosted by $1,200 b. Undercosted by $7,200 C. Overcosted by $7,200 O d. Overcosted by $1,200 hour $20/inspection Job #156 required 25 purchase orders, 400 direct labour hours, 50 production runs, and 100 inspections. If a traditional costing system was used, this job would be:arrow_forward
- Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for the upcoming year for the given activity cost pools: Fabrication Finishing Department Department Cost Driver $ 30,000 15,000 Machine hours 22,500 Material moves 45,000 105,000 7,500 Machine setups 37,500 Inspection hours Total $180,000 $82,500 The following activity predictions were also made for the year: Maintenance Materials handling Machine Inspections Fabrication Finishing Department Department 5,000 2,500 1,500 750 25 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates: The production manager has provided the…arrow_forwardThe DEF Company has two categories of overhead: machine maintenance and inspection. Overhead costs expected for these categories for the coming year are as follows: Machine Maintenance $180,000 Inspection 220,000 The following data has been assembled for use in developing a bid for a proposed job. Direct materials $1,200 Direct labour $4,800 Machine hours 420 Number of inspections 7 Direct labour hours 550 Total expected machine hours for all jobs during the year is 40,000 and the total expected number of inspections is 2,500. Using activity-based costing and the appropriate cost drivers (machine hours for machine maintenance cost and number of inspections for inspection cost), the total cost of the potential job would be:arrow_forwardObi Wan Pierogi, Inc. has prepared the following estimates for the coming year:Estimated Direct Labor Hours: 80, 000 hoursEstimated Direct Labor Costs: $1,000,000Estimated Machine Hours: 60,000 hoursEstimated Manufacturing Overhead Costs: $600, 000Overhead is applied using machine hours. If Job #123 uses 9, 500 machine hours, how much total overhead will be applied to it ?$60,000 $10.00 $600,000 $95,000arrow_forward
- Fulcrum Industries manufactures dining chairs and tables. The following information is available in December 2020: Dining Chairs Tables Total CostMachine setups 200 600 $48,000Inspections 250 470 $72,000Labor hours 2,600 2,400 Fulcrum is considering switching from one overhead rate based on labor hours to activity-based costing.InstructionsPerform the following analyses for these two components of overhead:a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.b. Compute total machine setups and inspection costs assigned to each product, using activity-based costing.c. Comment on your findings.arrow_forwardActivity-Based Costing Slack Corporation has the following predicted indirect costs and cost drivers for the year for the given activity cost pools: Maintenance Materials handling Machine setups Inspections Machine hours Material moves Machine setups Inspection hours Fabrication Department Finishing Department Cost Driver $50,000 30,000 70,000 $40,000 Machine hours 15,000 Material moves 5,000 Machine setups 25,000 Inspection hours $85,000 The following activity predictions were also made for the year. Fabrication Department Finishing Department Direct materials cost Direct labor cost Machine hours (Fabrication) Machine hours (Finishing) Materials moves Machine setups Inspection hours It is assumed that the cost per unit of activity for a given activity does not vary between departments. Slack's president, Charles Slack, is trying to evaluate the company's product mix strategy regardin two of its five product models, ZX300 and SL500. The company has been using a company-wide overhead…arrow_forwardAn advertising agency is estimating costs for promoting a music festival. The job will require 350 direct labor hours at a cost of $80 per hour. Overhead costs are applied at a rate of $80 per direct labor hour. 1. What is the total estimated cost for this job? 2. If the company applies a markup of 20% of total costs (price quote is 120% of total costs), what price should it quote for this job? 1. Total estimated job cost 2. Price quotearrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College