Chapter 19, Problem P19.36BPGB

To determine

Job Order Costing – Construction Company:

Superior construction co. uses job order costing. Company records its overhead expenses into construction overhead account. Overhead are allocated based on predetermined allocation base.

Predetermined Allocation Rate:

Predetermine overhead allocation rate is which at a company allocates its overheads expenses to different jobs. This rate can be calculated on basis of direct labour cost, direct labour hours or total machine hours.

To determine:

1. Compute the predetermined overhead allocation rate of Meadow for the year.

2. Journalize the events of Meadow Construction in general Journal.

3. Open T-accounts for Work-in-Process Inventory and Finished Goods Inventory and post the appropriate journal entries to these accounts.

4. Determine whether the total cost of unfinished houses and ending balance in the Work-in-Process Inventory account are equal or not.

5. Determine whether the total cost of completed house that has not yet been sold and the ending balance in Finished Goods Inventory are equal or not.

6. Compute the gross profit for the house sold and what costs must gross profit cover for Meadow Construction?