Question

In: Accounting

Waltman and Associates, a public accounting firm, uses job-order costing to capture the costs of its...

Waltman and Associates, a public accounting firm, uses job-order costing to capture the costs

of its audit jobs. There were no audit jobs in process at the beginning of November. Listed

below are data concerning the three audit jobs conducted during November:

Koppel Dupont Rojas

Direct Materials $650 $570 $435

Auditor Labour Costs $4,700 $6,100 $5,775

Auditor Hours    64 75 70

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined

overhead rate is $58 per auditor hour. The Koppel job is the only incomplete job at the end of

November. Actual overhead for the month was $12,500.

Would you be able to help me with the following ?

1. Determine the cost of each job.

2. Indicate the balance of the Work in Process account at the end of November.

3. Calculate the ending balance of the Overhead account for November.

Solutions

Expert Solution

1. Koppel Dupont Rojas
Direct materials            650              570              435
Labour costs        4,700           6,100           5,775
Auditor hours              64                75                70
OH costs        3,712           4,350           4,060
Cost of each job        9,062        11,020        10,270

OH costs to be allocated based on the predetermined rate of $58 / audit hours.

2. All costs of Koppel will be in Work in process account at the end of November since the job was not complete. Hence the closing balance of WIP account will be $ 9062.

3. Overhead costs have been allocated to jobs on at a predetermined rate @ $ 58 / audit hour. So now total OH recovered in the onth of November = 3712 + 4350 + 4060 = 12,122. This means that OH costs have not been recovered, and under applied by $378 (12500-12122). OH account will have a closing debit balance of $378 and might be adjusted in next month.

ekkarill92 answered 1 year ago
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