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	$54,250		Number of moves	2,500
Engineering	120,700		Number of change orders	8,500
Other overhead	148,500		Direct labor hours	45,000

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	$24,600		$20,000		$3,500		$0
Direct materials	$5,500		$10,000		$12,900		$11,400
Direct labor cost	$830		$1,080		$1,510		$130

	Job 13-43		Job 13-44		Job 13-45		Job 13-46
Number of moves	45		49		30		6
Number of change orders	31		39		15		23
Direct labor hours	830		1,080		1,510		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?

$   

How would the cost of the other jobs be affected?

Answer 1

A	Activity	Cost	Driver	Amount of Driver	Cost per Driver
	Materials handling	54,250	Number of moves	2,500	21.70	Per Move
	Engineering	1,20,700	Number of change orders	8,500	14.20	Per Change Order
	Other overhead	1,48,500	Direct labor hours	45,000	3.30	Per DLH
B	Heitger Company
	Job-Order Cost Sheets
		Job 13-43	Job 13-44	Job 13-45	Job 13-46
	Balance, July 1	24600	20000	3500	0
	Direct materials	5500	10000	12900	11400
	Direct labor cost	830	1080	1510	130
	Materials handling	977	1063	651	130
	Engineering	440	554	213	327
	Other overhead	2739	3564	4983	429
	Total	35086	36261	23757	12416
	Job Status	Sold	Sold	WIP	WIP
C	Work in Progress on Jul 31:
	Job No.	WIP Value
	Job 13-45	23757
	Job 13-46	12416
	Total	36173
D	COGS for July:
	Job No.	COGS Value
	Job 13-43	35086
	Job 13-44	36261
	Total	71347
E		Job 13-46
	Balance, July 1	0
	Direct materials	11400
	Direct labor cost	130
	Materials handling	130
	Engineering	0
	Other overhead	429
	Total	12089
	Job Status	WIP
	Earlier Cost	12,416
	Cost Revised	12,089