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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Applying Overhead to Jobs, Costing Jobs

Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process: Job 93 with a beginning balance of $8,750 and Job 94 with a beginning balance of $7,300. Jagjit applies overhead at the rate of $8 per direct labor hour. Direct labor wages average $18 per hour.

Data on August costs for all jobs are as follows:

Chapter 4, Problem 43E, Applying Overhead to Jobs, Costing Jobs Jagjit Company designs and builds retaining walls for

During August, Jobs 95 and 96 were started. Job 93 was completed on August 17, and the client was billed at cost plus 40%. All other jobs remained in process.

Required:

  1. 1. Calculate the number of direct labor hours that were worked on each job in August.
  2. 2. Calculate the overhead applied to each job during the month of August.
  3. 3. Prepare job-order cost sheets for each job as of the end of August.
  4. 4. Calculate the balance in Work in Process on August 31.
  5. 5. What is the price of Job 93?
  6. 6. CONCEPTUAL CONNECTION Partway though the year, Jagjit bought a bulldozer to handle larger jobs. The bulldozer cost $38,000 and is needed for larger commercial jobs. Smaller residential jobs can still be done with the smaller bobcat tractor. How could the bulldozer’s cost be applied to only those jobs that need the larger equipment?

1.

To determine

Compute the number of direct labor hours worked for each job in August.

Explanation

Direct labor:

A portion of labor that is directly connected to the production function of the firm is known as direct labor. Direct labor is a part of prime cost and it is applied to each unit of production.

Use the following formula to calculate direct labor hours:

Directlaborhours=Directlabor

2.

To determine

Compute the applied overhead of each job inAugust.

3.

To determine

Make job-order cost sheet for each job.

4.

To determine

Compute balance in work in progress at the end of August.

5.

To determine

Calculate the price of Job 93.

6.

To determine

Explain the application of bulldozer’s cost to only those jobs that need the larger equipment.

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