Question

Job Costs Using Activity-Based Costing

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	$101,200		Number of moves	4,000
Engineering	142,400		Number of change orders	8,000
Other overhead	358,800		Direct labor hours	52,000

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	$24,200		$17,200		$3,600		$0
Direct materials	$5,600		$8,600		$11,100		$10,300
Direct labor cost	$970		$950		$1,680		$130

	Job 13-43		Job 13-44		Job 13-45		Job 13-46
Number of moves	44		50		35		5
Number of change orders	27		41		18		19
Direct labor hours	970		950		1,680		130

By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.

Required:

1. Calculate the activity rates for each of the three overhead activities. Round all activity rates to the nearest cent.

Materials handling rate	$ per move
Engineering rate	$ per change order
Other overhead rate	$ per direct labor hour

2. Prepare job-order cost sheets for each job showing all costs through July 31.

When required, round your answers to the nearest dollar. If an amount is zero, enter "0".

Heitger Company
Job-Order Cost Sheets
	Job 13-43	Job 13-44	Job 13-45	Job 13-46
Balance, July 1	$	$	$	$
Direct materials
Direct labor cost
Materials handling
Engineering
Other overhead
Total	$	$	$	$

3. Calculate the balance in Work in Process on July 31.

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?

Answer 1

1)	Activity rates
	Materials handling rate			25.3	per move
	engineering rate			17.8	per change order
	other overhead rate			6.9	per direct labor hour
2)	Job order cost sheet
				job 13-43	job 13-44	job13-45	job 13-46
	Balance,july 1			24,200	17,200	3,600	0
	direct materials			5,600	8,600	11,100	10,300
	direct labor cost			970	950	1680	130
	materials handling			1113	1265	886	127
	engineering			481	730	320	338
	other overhead			6693	6555	11592	897
	total			39,057	35,300	29,178	11,792
3)	Balance of work in process july 31					40,970
	(job 45 and job 46)
4)	cost of goods sold for july					74,357
	(job 43 and 44)
5)	difference in cost will be			338