Question
In: Accounting
Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for...
Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for each of the three jobs are summarized below:
| Job | Direct Materials | Direct Labor Hours | Direct Labor Cost | ||||||
| Harrison | $ | 6,948 | 55 | $ | 15,783 | ||||
| Barnes | 13,424 | 94 | 23,770 | ||||||
| Tyler | 44,002 | 125 | 51,240 | ||||||
Budgeted direct materials cost and direct labor cost for the year are estimated at $515,000 and $730,000, respectively. Direct labor hours are budgeted at 29,000 hours, and total overhead is budgeted at $493,000.
Required:
1. Calculate the total cost of each of the three jobs.
2. Suppose that for the entire year, Whitley used 30,300 labor hours and total actual overhead was $512,000. What is the amount of underapplied or overapplied overhead?
Complete this question by entering your answers in the tabs below.
- Required 1
- Required 2
Calculate the total cost of each of the three jobs.
|
Solutions
Expert Solution
Required 1 :-
Calculation of Total cost for each jobs:-
Predetermined rate for overhead = budget OH/Budgeted Labor Hr
= $493,000/29,000
= $17
Total cost for Harison:-
Direct Material = $6,948+
Direct Labor = $15,783+
Overhead Applied ($17*55) $ 935
Total Cost = $23,666
Total cost for Barnes:-
Direct Material = $13,424
Direct Labor = $23,770
Overhead Applied($17*94)= $ 1,598
Total cost = $38,792
Total cost for Tyler:-
Direct Material = $44,002
Direct Labor = $51,240
Overhead Applied($17*125) $ 2,125
Total cost = $97,367
Usually all firms uses normal costing. In normal costing the direct material and direct labor are taken the actual figure because the firm knows how much they spend for material and labor. Overhead is taken on the predetermined rate because the overhead costs are usually calculated for a year not for a particular job. So they are unknown for the until the year end. So firms prefer to use normal costing.
Required 2 :-
Overhead Applied = $17*30,300 = $515,100
Actual Overhead = $512,000
So,
$515,100 - $512,000
= $3,100 is OVER APPLIED.
ekkarill92 answered 2 days agoRelated Solutions
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