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

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

ekkarill92 answered 1 week ago

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