Question

In: Accounting

EXAMPLE: G.A. Courtney & Sons build homes.  Each home is considered a job; costs are accumulated by...

EXAMPLE:

G.A. Courtney & Sons build homes.  Each home is considered a job; costs are accumulated by job to determine the final cost of a home. The company builds two types of homes. Standard models are framed at factory using high-tech machinery and take little direct labor to complete. Custom homes are framed and finished at the building site using mostly direct labor and few machine hours. Annual estimates for each department follow:

Framing

Finishing

Total

Total Overhead

$400,000

$167,600

$567,600

DLH

9,700

41,900

51,600

MH

160,000

-0-

160,000

During the year, five jobs were started and completed. Jobs #101 and #103 were custom homes.  The remaining jobs were standard models. Direct materials (DM), direct labor (DL), direct labor hours (DLH), and machine hours (MH) for each job follow:

DM

DL

Framing

DLH

Finishing

DLH

Total

DLH

MH

Job #101

$364,000

$280,000

1,000

19,000

20,000

500

Job #102

90,000

100,000

2,800

500

3,300

46,500

Job #103

455,000

350,000

600

20,890

21,490

1,600

Job #104

144,000

160,000

2,100

800

2,900

52,000

Job #105

127,800

142,000

3,200

710

3,910

59,400

  Total

$1,180,800

$1,032,000

9,700

41,900

51,600

160,000

REQUIRED:

(1)        Calculate the predetermined overhead rate (POR) using:

(a)        A single, plantwide cost pool and DLH as the application base.

(b)        Separate total overhead amounts for each department (one total for framing and one for finishing). Use MH as the application base for framing and DLH for finishing.

(2)        Use the following format to calculate:

            (a)        The total costs of each job using the single, plantwide POR (from                                                      (1)(a) above).   

(b)        The total costs of all jobs using the single, plantwide POR (from (1)(a) above).

Note: the “totals” line item at the bottom of the table satisfy this requirement.

             

DM

DL

OH

Total

Job #101

$xxx

$xxx

$xxx

$xxx

Job #102

xxx

xxx

xxx

xxx

Etc……

  Totals  

$xxx

$xxx

$xxx

$xxx

(3)        Use the following format to calculate:

(a)        The total costs of each job using the two departmental (framing and finishing) PORs (from (1)(b) above).

(b)        The total costs of all jobs using the two departmental (framing and finishing) PORs (from (1)(b) above)

Note: the “totals” line item at the bottom of the table satisfy this requirement.

DM

DL

Framing

OH

Finishing

OH

Total

Job #101

$xxx

$xxx

$xxx

$xxx

$xxx

Job #102

xxx

xxx

xxx

$xxx

xxx

Etc……

  Totals  

$xxx

$xxx

$xxx

$xxx

$xxx

Solutions

Expert Solution

Req 1-a
Single vide Oh rate:
Total Overheads
Framing 400000
Finishing 167600
Total Overheads 567600
Divide: Total DLH (9700+41900) 51600
OH rate per DLH 11 per DLH
Req 1-b
Framing:
Total OH of Framing 400000
Divide: MH used in Framing 160000
Framing OH rate per MH 2.5 per MH
Finishing:
Total OH of Finishing 167600
Divide: DLH used in finishing 41900
Finishing OH rate per DLH 4 per DLH
Req 2-a/b
Job Cost Sheet
JOBS DM DL OH TOTAL
Job 101 364000 280000 220000 864000
Job 102 90000 100000 36300 226300
Job 103 455000 350000 236390 1041390
Job 104 144000 160000 31900 335900
Job 105 127800 142000 43010 312810
TOTAL 1180800 1032000 567600 2780400
The Total cost of all the Jobs is $ 2780,400.
Note:
Ohh applied to each jobs
JOBS Total DLH OH rate per DLH OH applied
Job 101 20000 11 220000
Job 102 3300 11 36300
Job 103 21490 11 236390
Job 104 2900 11 31900
Job 105 3910 11 43010
Req 3-a/b
Job Cost Sheet
JOBS DM DL Framing OH Finishing OH Total
Job 101 364000 280000 1250 76000 721250
Job 102 90000 100000 116250 2000 308250
Job 103 455000 350000 4000 83560 892560
Job 104 144000 160000 130000 3200 437200
Job 105 127800 142000 148500 2840 421140
TOTAL 1180800 1032000 400000 167600 2780400
The Total cost of all the jobs is $ 2780,400
Note:
Framing OH applied
JOBS Total MH OH rate per MH OH applied
Job 101 500 2.5 1250
Job 102 46500 2.5 116250
Job 103 1600 2.5 4000
Job 104 52000 2.5 130000
Job 105 59400 2.5 148500
Finishing OH applied
JOBS Finishing DLH OH rate per DLH OH applied
Job 101 19000 4 76000
Job 102 500 4 2000
Job 103 20890 4 83560
Job 104 800 4 3200
Job 105 710 4 2840

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