JOB COSTING
4-1
Cost pool––a grouping of individual cost items.
Cost tracing––the assigning of direct costs to the chosen cost object.
Cost allocation––the assigning of indirect costs to the chosen cost object.
Cost-allocation base––a factor that links in a systematic way an indirect cost or group of indirect costs to a cost object.
4-2
In a job-costing system, costs are assigned to a distinct unit, batch, or lot of a product or service. In a process-costing system, the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units.
4-3
An advertising campaign for Pepsi is likely to be very specific to that individual client. Job costing enables all the specific aspects of each job to be identified. In contrast, the processing of checking account withdrawals is similar for many customers. Here, process costing can be used to compute the cost of each checking account withdrawal.
4-4
The seven steps in job costing are:
(1) identify the job that is the chosen cost object,
(2) identify the direct costs of the job,
(3) select the cost-allocation bases to use for allocating indirect costs to the job,
(4) identify the indirect costs associated with each cost-allocation base,
(5) compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job,
(6) compute the indirect costs allocated to the job, and
(7) compute the total cost of the job by adding all direct and indirect costs assigned to the job.
4-5
Two major cost objects that managers focus on in companies using job costing are:
(1) products or jobs, and
(2) responsibility centers or departments.
4-6
Three major source documents used in job-costing systems are:
(1) job cost record or job cost sheet, a document that records and accumulates all costs assigned to a specific job, starting when work begins
(2) materials requisition record, a document that contains information about the cost of direct materials used on a specific job and in a specific department; and
(3) labor-time record, a document that contains information about the labor time used on a specific job and in a specific department.
4-7
The main concern with the source documents of job cost records is the accuracy of the records. Problems occurring in this area include incorrect recording of quantity or dollar amounts, materials recorded on one job being “borrowed” and used on other jobs, and erroneous job numbers being assigned to materials or labor inputs.
4-8
Two reasons for using an annual budget period are:
a. The numerator reason––the longer the time period, the less the influence of seasonal patterns, and
b. The denominator reason––the longer the time period, the less the effect of variations in output levels on the allocation of fixed costs.
4-9
Actual costing and normal costing differ in their use of actual or budgeted indirect cost rates:
4-1
Cost pool––a grouping of individual cost items.
Cost tracing––the assigning of direct costs to the chosen cost object.
Cost allocation––the assigning of indirect costs to the chosen cost object.
Cost-allocation base––a factor that links in a systematic way an indirect cost or group of indirect costs to a cost object.
4-2
In a job-costing system, costs are assigned to a distinct unit, batch, or lot of a product or service. In a process-costing system, the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units.
4-3
An advertising campaign for Pepsi is likely to be very specific to that individual client. Job costing enables all the specific aspects of each job to be identified. In contrast, the processing of checking account withdrawals is similar for many customers. Here, process costing can be used to compute the cost of each checking account withdrawal.
4-4
The seven steps in job costing are:
(1) identify the job that is the chosen cost object,
(2) identify the direct costs of the job,
(3) select the cost-allocation bases to use for allocating indirect costs to the job,
(4) identify the indirect costs associated with each cost-allocation base,
(5) compute the rate per unit of each cost-allocation base used to allocate indirect costs to the job,
(6) compute the indirect costs allocated to the job, and
(7) compute the total cost of the job by adding all direct and indirect costs assigned to the job.
4-5
Two major cost objects that managers focus on in companies using job costing are:
(1) products or jobs, and
(2) responsibility centers or departments.
4-6
Three major source documents used in job-costing systems are:
(1) job cost record or job cost sheet, a document that records and accumulates all costs assigned to a specific job, starting when work begins
(2) materials requisition record, a document that contains information about the cost of direct materials used on a specific job and in a specific department; and
(3) labor-time record, a document that contains information about the labor time used on a specific job and in a specific department.
4-7
The main concern with the source documents of job cost records is the accuracy of the records. Problems occurring in this area include incorrect recording of quantity or dollar amounts, materials recorded on one job being “borrowed” and used on other jobs, and erroneous job numbers being assigned to materials or labor inputs.
4-8
Two reasons for using an annual budget period are:
a. The numerator reason––the longer the time period, the less the influence of seasonal patterns, and
b. The denominator reason––the longer the time period, the less the effect of variations in output levels on the allocation of fixed costs.
4-9
Actual costing and normal costing differ in their use of actual or budgeted indirect cost rates:
Each costing method uses the actual quantity of the direct-cost input and the actual quantity of the cost-allocation base.
4-10
A house construction company may can use job cost information
(a) to determine the profitability of individual jobs,
(b) to assist in bidding on future jobs, and
(c) to evaluate professionals who are in charge of managing individual jobs.
4-11
The statement is false. In a normal costing system, the Manufacturing Overhead Control account will not, in general, equal the amounts in the Manufacturing Overhead Allocated account. The Manufacturing Overhead Control account aggregates the actual overhead costs incurred while Manufacturing Overhead Allocated allocates overhead costs to jobs on the basis of a budgeted rate times the actual quantity of the cost-allocation base.
Underallocation or overallocation of indirect (overhead) costs can arise because of:
(a) Numerator reason––the actual overhead costs differ from the budgeted overhead costs, and
(b) Denominator reason––the actual quantity used of the allocation base differs from the budgeted quantity.
4-12
Debit entries to Work-in-Process Control represent increases in work in process. Examples of debit entries under normal costing are:
(a) direct materials used (credit to Materials Control),
(b) direct manufacturing labor billed to job (credit to Wages Payable Control), and
(c) manufacturing overhead allocated to job (credit to Manufacturing Overhead Allocated).
4-13
Alternative ways to make end-of-period adjustments for underallocated or overallocated overhead are:
(i) Proration based on the total amount of indirect costs allocated (before proration) in the ending balances of work in process, finished goods, and cost of goods sold.
(ii) Proration based on total ending balances (before proration) in work in process, finished goods, and cost of goods sold.
(iii) Year-end write-off to Cost of Goods Sold.
(iv) Restate all overhead entries using actual indirect cost rates rather than budgeted indirect cost rates.
4-14
A company might use budgeted costs rather than actual costs to compute direct labor rates because it may be difficult to trace direct labor costs to jobs as they are completed (for example, because bonuses are only known at the end of the year).
4-15
Modern technology such as electronic data interchange (EDI) is helpful to managers because it provides them with quick and accurate product-cost information that facilitates the management and control of jobs.
4-16 Job order costing, process costing.
a. Job costing
b. Process costing
c. Job costing
d. Process costing
e. Job costing
f. Process costing
g. Job costing
h. Job costing (but some process costing)
i. Process costing
j. Process costing
k. Job costing
m. Process costing
n. Job costing
o. Job costing
p. Job costing
q. Job costing
r. Process costing
s. Job costing
t. Process costing
u. Job costing
4-17 Actual costing, normal costing, accounting for manufacturing overhead.
1.
2.
Costs of Job 626 under actual and normal costing follow:
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3.
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3.
Total manufacturing overhead allocated under normal costing =
= Actual manufacturing labor costs x Budgeted overhead rate
= Actual manufacturing labor costs x Budgeted overhead rate
= $980,000 x 1.75
= $1,715,000
= $1,715,000
Underallocated manufacturing overhead
= Actual manufacturing overhead costs - Manufacturing overhead allocated
= Actual manufacturing overhead costs - Manufacturing overhead allocated
= $1,862,000 - $1,715,000
= $147,000
There is no under- or overallocated overhead under actual costing because overhead is allocated under actual costing by multiplying actual manufacturing labor costs and the actual manufacturing overhead rate. This, of course equals the actual manufacturing overhead costs. All actual overhead costs are allocated to products. Hence, there is no under- or overallocated overhead.
There is no under- or overallocated overhead under actual costing because overhead is allocated under actual costing by multiplying actual manufacturing labor costs and the actual manufacturing overhead rate. This, of course equals the actual manufacturing overhead costs. All actual overhead costs are allocated to products. Hence, there is no under- or overallocated overhead.
4-18 Job costing, normal and actual costing.
1.
These rates differ because both the numerator and the denominator in the two calculations are different—one based on budgeted numbers and the other based on actual numbers.
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3.
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3.
Normal costing enables Anderson to report a job cost as soon as the job is completed, assuming that both the direct materials and direct labor costs are known at the time of use/work. Once the 900 direct labor-hours are known for the Laguna Model (June 2004), Anderson can compute the $187,726 cost figure using normal costing. Anderson can use this information to manage the costs of the Laguna Model job as well as to bid on similar jobs later in the year. In contrast, Anderson has to wait until the December 2004 year-end to compute the $180,526 cost of the Laguna Model using actual costing.
Although not required, the following overview diagram summarizes Anderson Construction’s job-costing system.
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4-19 Budgeted manufacturing overhead rate, allocated manufacturing overhead.
1.
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4-19 Budgeted manufacturing overhead rate, allocated manufacturing overhead.
1.
2.
Manufacturing overhead allocated
= Actual machine-hours × Budgeted manufacturing overhead rate
= 195,000 × $15
= $2,925,000
3.
3.
Since manufacturing overhead allocated is greater than the actual manufacturing overhead costs, Waheed overallocated manufacturing overhead:
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4-20 Job costing, accounting for manufacturing overhead, budgeted rates.
1.
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4-20 Job costing, accounting for manufacturing overhead, budgeted rates.
1.
An overview of the product costing system is:
Budgeted manufacturing overhead divided by allocation base:
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Budgeted manufacturing overhead divided by allocation base:
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2.
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3.
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Machining Assembly
Actual manufacturing overhead $2,100,000 $ 3,700,000
Manufacturing overhead allocated,
55,000 ´ $36 1,980,000
180% ´ $2,200,000 3,960,000
Underallocated (Overallocated) $ 120,000 $ (260,000)
4-21 Job costing, consulting firm.
1.
Budgeted indirect-cost rate
= $13,000,000 ÷ $5,000,000
= 260% of professional labor costs
2.
At the budgeted revenues of $20,000,000, Taylor’s operating income of $2,000,000 equals 10% of revenues.
Markup rate
= $20,000,000 ÷ $5,000,000
= 400% of direct professional labor costs
3.
Budgeted costs
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Bid price to earn target operating income-to-revenue margin of 10% can be calculated as follows:
Let R = revenue to earn target income
R – 0.10R = $32,400
.......0.90R = $32,400
...............R = $32,400 ÷ 0.90
...................= $36,000
or,
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4-23 Job costing, journal entries.
Some instructors may also want to assign Exercise 4-24. It demonstrates the relationships of the general ledger to the underlying subsidiary ledgers and source documents.
1. An overview of the product costing system is:
2. & 3.
This answer assumes COGS given of $4,020 does not include the write-off of overallocated manufacturing overhead.
2.
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3.
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4-24 Job costing, journal entries, and source documents (continuation of 4-23).
The analysis of source documents and subsidiary ledgers follows:
1.
a. Approved purchase invoice
b. Dr. Materials record, "received" column
..........Cr. Accounts payable subsidiary ledger, account for creditor
2.
a. Materials requisition record
b. Dr. Job cost records
..........Cr. Materials record, "issued" column
3.
a. Materials requisition record
b. Dr. Department overhead cost records, appropriate column
..........Cr. Materials record, "issued" column
4.
a. Summary of labor-time records or daily time analysis. This summary is
sometimes called a labor cost distribution summary.
b. Dr. Job cost records
Dr. Department overhead cost records, appropriate columns for
......various classes of indirect labor
......Cr. Wages payable subsidiary ledger
5.
a. Special authorization from the responsible accounting officer
b. Dr. Department overhead cost records, appropriate columns
..........Cr. Accumulated depreciation subsidiary ledger
6.
a. Various approved invoices and special authorizations
b. Dr. Department overhead cost records, appropriate columns
7.
a. Use of an authorized budgeted manufacturing overhead rate
b. Dr. Job cost record
8.
a. Completed job cost records
b. Dr. Finished goods records, received column
..........Cr. Job cost record, completed column
9.
a. Approved sales invoice
b. Dr. Accounts receivable subsidiary ledger
..........Cr. Sales ledger, if any
10.
a. Costed sales invoice
b. Cr. Finished goods records, issued column
11.
a. Special authorization from the responsible accounting officer
b. Subsidiary records are generally not used for these entries
4-25 Job costing, unit cost, ending work in process.
1.
Cost of Job M1:
*Budgeted rate $30 × 6,000 direct manufacturing labor-hours = $180,000
2.
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3.
Dr. Finished Goods Control .........525,000
.......Cr. Work in Process Control ................525,000
4.
The work in process consists of Job M2 only:
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*Budgeted rate of $30 × 5,000 direct manufacturing labor-hours.
4-26 Job costing; actual, normal, and variation of normal costing.
1.
Actual direct cost rate for professional labor
= $58 per professional labor-hour
Actual indirect cost rate
= 744,000/15,500
= $48 per professional labor-hour
Budgeted direct cost rate for professional labor
= 960,000/16,000
= $60 per professional labor-hour
Budgeted indirect cost rate
= 720,000/16,000
= $45 per professional labor-hour
2.
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All three costing systems use the actual professional labor time of 120 hours. The budgeted 110 hours for the Pierre Enterprises audit job is not used in job costing. However, Chirac may have used the 110 hour number in bidding for the audit.
The actual costing figure of $12,720 exceeds the normal costing figure of $12,360, because the actual indirect-cost rate ($48) exceeds the budgeted indirect-cost rate ($45). The normal costing figure of $12,360 is less than the variation of normal costing (based on budgeted rates for direct costs) figure of $12,600, because the actual direct-cost rate ($58) is less than the budgeted direct-cost rate ($60).
Although not required, the following overview diagram summarizes Chirac’s job-costing system.
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4-28 Job costing, accounting for manufacturing overhead, budgeted rates.
1.
An overview of the job-costing system is:
2.
Budgeted manufacturing overhead divided by allocation base:
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3.
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4.
Total costs of Job 431:
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The per-unit product cost of Job 431 is
= $27,850 ÷ 200 units
= $139.25 per unit
The point of this part is (a) to get the definitions straight and (b) to underscore that overhead is allocated by multiplying the actual amount of the allocation base by the budgeted rate.
5.
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Total overallocated overhead
= $300,000 – $200,000
= $100,000
6.
A homogeneous cost pool is one where all costs have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base. Solomon likely assumes that all its manufacturing overhead cost items are not homogeneous. Specifically, those in the Machining Department have a cause-and-effect relationship with machine-hours, while those in the Finishing Department have a cause-and-effect relationship with direct manufacturing labor costs. Solomon believes that the benefits of using two cost pools (more accurate product costs and better ability to manage costs) exceed the costs of implementing a more complex system.
4-29 Service industry, job costing, law firm.
1.
2.
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Note that the budgeted professional labor-hour direct-cost rate can also be calculated by dividing total budgeted professional labor costs of $2,600,000 ($104,000 per professional x 25 professionals) by total budgeted professional labor-hours of 40,000 (1,600 hours per professional x 25 professionals), $2,600,000 ¸ 40,000 = $65 per professional labor-hour.
3.
Budgeted indirect cost rate
= $2,200,000/(1,600 x 25)
= $55 per professional labor-hour
4.
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4-30 Service industry, job costing, two direct and indirect cost categories, law firm (continuation of 4-29).
Although not required, the following overview diagram is helpful to understand Keating’s job-costing system.
1.
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2.
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3.
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4.
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The Richardson and Punch jobs differ in their use of resources. The Richardson job has a mix of 60% partners and 40% associates, while Punch has a mix of 20% partners and 80% associates. Thus, the Richardson job is a relatively high user of the more costly partner-related resources (both direct partner costs and indirect partner secretarial support). The refined-costing system in Problem 4-32 increases the reported cost in Problem 4-31 for the Richardson job by 41.7% (from $12,000 to $17,000).
4-31 Normal costing, overhead allocation, working backwards.
1a.
Manufacturing overhead allocated = 200% × Direct manufacturing labor costs
$3,600,000 = 2 × Direct manufacturing labor costs
Direct manufacturing labor costs = $3,600,000/2 = $1,800,000
1b.
Total manufacturing costs
= Direct material used + Direct manufacturing labor cost
....+ Manufacturing overhead allocated
$8,000,000 = Direct material used + $1,800,000 + $3,600,000
Direct material used = $2,600,000
2.
Work-in-Process on 1/1/2004 + Total manufacturing costs
= Cost of goods manufactured + Worn-in-Process on 31/12/2004
Denote Work in Process on 12/31/2004 by X
$320,000 + $8,000,000 = $7,920,000 + X
X = $400,000
4-32 Proration of overhead, two indirect-cost pools.
Machining Department
Total actual machine-hours
= 67,500 + 4,500 + 18,000
= 90,000 machine-hours
Manufacturing overhead allocated
= 90,000 × $60
= $5,400,000
Manufacturing overhead costs underallocated
= Actual manufacturing overhead costs – Manufacturing overhead allocated
= $6,200,000 – $5,400,000
= $800,000
Assembly Department
Total actual direct manufacturing labor-hours
= 90,000 + 4,800 + 25,200
= 120,000 direct manufacturing labor-hours
Manufacturing overhead allocated
= 120,000 × $40
= $4,800,000
Manufacturing overhead costs overallocated
= Manufacturing overhead allocated – Actual manufacturing overhead costs
= $4,800,000 – $4,700,000
= $100,000
1a.
Write-off to Cost of Goods Sold leads to
(i) higher Cost of Goods Sold of $800,000 as a result of underallocation of manufacturing overhead in the Machining Department;
(ii) lower Cost of Goods Sold of $100,000 as a result of overallocation of manufacturing overhead in the Assembly Department. Hence,
Cost of Goods Sold = $16,000,000 + $800,000 – $100,000 = $16,700,000
1b.
Proration based on ending balances (before proration) in Work in Process, Finished Goods, and Cost of Goods Sold.
Account balance in each account after proration follows.
1c.
Proration based on the overhead allocated (before proration) in the ending balances of Cost of Goods Sold, Finished Goods, and Work in Process for each department follows.
Machining Department
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Assembly Department
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Account balances in each account after proration of underallocated Machining Department costs and overallocated Assembly Department costs as follow:
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2.
If the purpose is to report the most accurate inventory and cost of goods sold figures, the preferred method is to prorate based on the manufacturing overhead allocated amount in the Inventory and Cost of Goods Sold accounts (as in requirement 1c). Note, however, that prorating based on ending balances in Work in Process, Finished Goods, and Cost of Goods Sold (as in requirement 1b) yields a close approximation to the more accurate proration in requirement 1c. Also note that the Write-off to Cost of Goods Sold method (as in requirement 1a) results in account balances in Work in Process, Finished Goods, and Cost of Goods sold that are not very different from the most accurate method. Furthermore, the Write off to Cost of Goods Sold method is simpler than the other methods. Depending on the objectives of proration, a manager may prefer any one of the methods over the other two.
4-33 General ledger relationships, under- and overallocation.
The solution assumes all materials used are direct materials. A summary of the T-accounts for Needham Company before adjusting for under- or overallocation of overhead follows:
1.
From Direct Materials Control T-account,
Direct materials issued to production = $380,000 that appears as a credit.
2.
Direct manufacturing labor-hours
= Direct manufacturing labor costs/Direct manufacturing wage rate per hour
$360,000/$15 per hour
= 24,000 hours
Manufacturing overhead allocated
Direct manufacturing labor hours x Manufacturing overhead rate
= 24,000 hours x $20
= $480,000
3.
From the debit entry to Finished Goods T-account,
Cost of jobs completed and transferred from WIP = $940,000
4.
From Work-in-Process T-account,
Work-in-Process inventory on 31/12/2003
= $20,000 + $380,000 + $360,000 + $480,000 – $940,000
= $300,000
5.
From the credit entry to Finished Goods Control T-account,
Cost of goods sold (before proration) = $900,000
6.
Manufacturing overhead underallocated
= Debit to Manufacturing Overhead control – Credit to Manufacturing Overhead allocated
= $540,000 – $480,000
= $60,000 underallocated
7.
a. Write-off to Cost of Goods Sold will increase (debit) Cost of Goods Sold by $60,000. Hence,
Cost of Goods Sold = $900,000 + $60,000 = $960,000.
b. Proration based on ending balances (before proration) in Work in Process, Finished Goods, and Cost of Goods Sold.
Account balances in each account after proration as follows:
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8.
Needham’s operating income under the write-off to Cost of Goods Sold and Proration based on ending balances (before proration) follows
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9.
If the purpose is to report the most accurate inventory and cost of goods sold figures, the preferred method is to prorate based on the manufacturing overhead allocated component in the inventory and cost of goods sold accounts. Proration based on the balances in Work in Process, Finished Goods, and Cost of Goods Sold will equal the proration based on the manufacturing overhead allocated component if the proportions of direct costs to manufacturing overhead costs are constant in the Work in Process, Finished Goods and Cost of Goods Sold accounts. Even if this is not the case, the proration based on Work in Process, Finished Goods, and Cost of Goods Sold will better approximate the results if actual cost rates had been used rather than the write-off to Cost of Goods Sold method.
Another consideration in Needham’s decision about how to dispose of underallocated manufacturing overhead is the effects on operating income. The write-off to Cost of Goods Sold will lead to an operating loss. Proration based on the balances in Work in Process, Finished Goods, and Cost of Goods Sold will help Needham avoid the loss and show an operating income.
The main merit of the write-off to Cost of Goods Sold method is its simplicity. However, accuracy and the effect on operating income favor the preferred and recommended proration approach.
4-34 Allocation and proration of manufacturing overhead.
1. Although not required, an overview of the product costing system follows:
252,000/420,000
= $0.60 per direct manufacturing labor dollar
The Work-in-Process inventory breakdown at the end of 2001 for Jobs 1768B and 1819C is:
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The finished goods inventory at the end of 2001 is $156,000 (given). A direct manufacturing labor cost of $40,000 implies a budgeted manufacturing overhead costs component of $24,000.
The COGS is $1,600,000 (given). The total direct manufacturing labor of $400,000 implies direct manufacturing labor in COGS of $310,000 ($400,000 – $11,000 – $39,000 – $40,000). Hence, manufacturing overhead allocated in COGS is 60% x $310,000 = $186,000. Direct materials in COGS is $1,104,000 ($1,600,000 – $310,000 – $186,000).
The summary account information is:
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2.
Overallocated manufacturing overhead
= Manufacturing overhead allocated – Manufacturing overhead incurred
= $240,000 – $186,840
= $53,160
3a.
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3b.
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4.
The COGS amount when the overallocated overhead is immediately written off to COGS is $1,546,840 (see below) compared to $1,555,234 in 3(a) and $1,558,801 in 3(b). Thus, with a lower COGS, there is a higher operating income.
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5.
The adjusted allocation rate approach would adjust the cost of job 1819C for the amount of manufacturing overhead overallocated to it. For 2004, manufacturing overhead is overallocated to each job by 22.15% ($53,160/$240,000). Hence, the cost of job 1819C would be decreased by:
22.15% x Manufacturing overhead allocated to 1819C
= 22.15% x $23,400 = $5,183.10.
Cost of Job 1819C would then appear as follows:
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4-35 Job costing, contracting, ethics.
1.
Aerospace bills the Navy $52,000 ($40,000 x 130%) for 100 X7 seats or $520 ($52,000/100) per X7 seat.
2.
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a$6,000 – $400 ($25 x 16) setup – $600 ($50 x 12) design
Aerospace should have billed the Navy $48,750 ($37,500 x 130%) for 100 X7 seats or $487.50 ($48,750/100) per X7 seat.
3.
The problems the letter highlights (assuming it is correct) include:
a. Costs included that should be excluded (design costs),
b. Costs double-counted (setup included as both a direct cost and in an indirect cost pool), and
c. Possible conflict of interest in Aerospace Comfort purchasing materials from a family-related company.
Steps the Navy could undertake include:
(i) Use only contractors with a reputation for ethical behavior as well as quality products or services.
(ii) Issue guidelines detailing acceptable and unacceptable billing practices by contractors. For example, prohibiting the use of double-counting cost allocation methods by contractors.
(iii) Issue guidelines detailing acceptable and unacceptable procurement practices by contractors. For example, if a contractor purchases from a family-related company, require that the contractor obtain quotes from at least two other bidders.
(iv) Employ auditors who aggressively monitor the bills submitted by contractors.
(v) Ask contractors for details regarding determination of costs.
4-36 Service industry, job costing, accounting for overhead costs, budgeted rates.
2.
Overhead allocated to Job A21 as of 1/31/2004
= 0.80 × Actual direct labor costs of Job A21
= 0.80 × $50,000
= $40,000
3.
Overhead allocated to Job A24 as of 2/29/2004
= 0.80 × Actual direct labor costs of Job A24
= 0.80 × $40,000
= $32,000
4.
Overhead allocated to jobs in February
= 0.80 × Actual direct labor costs in February
= 0.80 × $120,000
= $96,000
Actual overhead costs incurred in February = $102,000
Underallocated overhead costs = $102,000 – $96,000 = $6,000
5.
Cost of Jobs Billed for February 2004
*Cost of Job A21
= Direct materials + Direct labor + Overhead allocated
= $30,000 + $50,000 + $40,000 = $120,000
**Cost of Job A24
= Direct materials + Direct labor + Overhead allocated
= $20,000 + $40,000 + $32,000 = $92,000
Soalan yang tak ade jawapan:
4-22
4-25 (Amount yang berlainan)
4-27
4-36 (1)
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