Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost Driver Amount of Driver Materials handling $91,350 Number of moves 3,500 Engineering 120,900 Number of change orders 6,500 Other overhead 392,700 Direct labor hours 51,000 Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44 Job 13-45 Job 13-46 Beginning balance $23,000 $18,700 $4,700 $0 Direct materials $5,300 $9,350 $13,100 $9,900 Direct labor cost $970 $1,050 $1,520 $100 Job 13-43 Job 13-44 Job 13-45 Job 13-46 Number of moves 41 53 28 6 Number of change orders 30 44 24 15 Direct labor hours 970 1,050 1,520 100 By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process. Required 4. Calculate the cost of goods sold for July. 5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46? How would the cost of the other jobs be affected?
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.
Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows:
| Activity | Cost | Driver | Amount of Driver | ||
| Materials handling | $91,350 | Number of moves | 3,500 | ||
| Engineering | 120,900 | Number of change orders | 6,500 | ||
| Other overhead | 392,700 | Direct labor hours | 51,000 |
Heitger worked on four jobs in July. Data are as follows:
| Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |||||
| Beginning balance | $23,000 | $18,700 | $4,700 | $0 | ||||
| Direct materials | $5,300 | $9,350 | $13,100 | $9,900 | ||||
| Direct labor cost | $970 | $1,050 | $1,520 | $100 |
| Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |||||
| Number of moves | 41 | 53 | 28 | 6 | ||||
| Number of change orders | 30 | 44 | 24 | 15 | ||||
| Direct labor hours | 970 | 1,050 | 1,520 | 100 |
By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.
Required
4. Calculate the cost of goods sold for July.
5. What if Job 13-46 required no engineering change orders? What is the difference in the new
How would the cost of the other jobs be affected?
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