Benson Construction Company expects to build three new homes during a specific accounting period. The estimated...

Benson Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows:

Expected Costs	Home 1		Home 2		Home 3
Direct labor	$	72,000	$	109,000	$	179,000
Direct materials		104,000		134,000		197,000

Assume Benson needs to allocate two major overhead costs ($36,000 of employee fringe benefits and $13,050 of indirect materials costs) among the three jobs.

Required

Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. (Round "Allocation rate" to 2 decimal places.)

Solutions

Expert Solution

Employee fringe benefits can be allocated in the ratio of direct labor cost and Indirect material can be allocated in ratio of direct material used in each house.

	Direct material	Direct labor	Overheads	Total Cost
House 1	$ 1,04,000.00	$ 72,000.00	$ 10,320.00	$ 1,86,320.00
House 2	$ 1,34,000.00	$ 1,09,000.00	$ 14,920.00	$ 2,57,920.00
House 3	$ 1,97,000.00	$ 1,79,000.00	$ 23,810.00	$ 3,99,810.00

Working

Total Fringe benefits	$ 36,000.00
Total Direct labor cost (72000+109000+179000)	$ 3,60,000.00
Overhead cost per $ of direct labor	$ 0.10

Total Indirect ,material cost	$ 13,050.00
Total Direct material cost (104000+134000+197000)	$ 4,35,000.00
Overhead cost per $ of direct labor	$ 0.03

	Direct material	Direct labor	Overheads
House 1	104000	72000	=(0.172000)+0.03104000
House 2	134000	109000	=(0.1109000)+0.03134000
House 3	197000	179000	=(0.1179000)+0.03197000

ekkarill92 answered 4 months ago

Next > < Previous

Related Solutions

Finch Construction Company expects to build three new homes during a specific accounting period. The estimated...

Finch Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Home 1 Home 2 Home 3 Direct labor $ 72,000 $ 93,000 $ 190,000 Direct materials 106,000 150,000 186,000 Assume Finch needs to allocate two major overhead costs ($53,250 of employee fringe benefits and $22,100 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead...

Gibson Construction Company expects to build three new homes during a specific accounting period. The estimated...

Gibson Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows: Expected Costs Home 1 Home 2 Home 3 Direct labor $ 80,000 $ 94,000 $ 187,000 Direct materials 92,000 139,000 195,000 Assume Gibson needs to allocate two major overhead costs ($54,150 of employee fringe benefits and $12,780 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead...

Solomon Construction Company expects to build three new homes during a specific accounting period. The estimated...

Solomon Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows: Expected Costs Home 1 Home 2 Home 3 Direct labor $ 65,000 $ 99,000 $ 189,000 Direct materials 98,000 136,000 188,000 Assume Solomon needs to allocate two major overhead costs ($70,600 of employee fringe benefits and $29,540 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead...

are an accounting measure of performance during a specific period of time, while is...

________ are an accounting measure of performance during a specific period of time, while ________ is the actual inflow or outflow of money. Profits; cash flow Cash flows; profit Dividends; cash flow Profits; a dividend

Problem 1 The manager of a construction company must decide whether to build single family homes,...

Problem 1 The manager of a construction company must decide whether to build single family homes, apartments, or condominiums. Profits (in thousands of dollars) are given in the following table and depend on various possible population trends. The probability of a declining population is 0.3, the probability for a stable population is 0.5 and the probability of a growing population is 0.2 Payoff table (in thousands of dollars): Population Declining Stable Growing Single Family Homes 220 80 75 Apartments 85...

Arlington, Texas wants to build a new recreation center. The estimated cost of construction cost us...

Arlington, Texas wants to build a new recreation center. The estimated cost of construction cost us $14 million with annual staffing and maintenance costs of $520,000 per year over the twenty-year life of the center. At the end of the life of the center, Arlington expects to sell the land for $5 million, though that figure might be as low as $1 million and as high $ 9 million. City staff estimate first year benefits to be $2.1 million (accruing...

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a...

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2021, costs of $2,000,000 were incurred, with estimated costs of $4,000,000 yet to be incurred. Billings of $2,500,000 were sent, and cash collected was $2,250,000. In 2022, costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2022 billings were $2,750,000, and $2,475,000 cash was collected. The project was completed in 2023 after additional costs of...

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,500,000. During 2018, costs of $2,200,000 were incurred, with estimated costs of $4,200,000 yet to be incurred. Billings of $2,740,000 were sent, and cash collected was $2,450,000. In 2019, costs incurred were $2,740,000 with remaining costs estimated to be $3,900,000. 2019 billings were $2,990,000, and $2,675,000 cash was collected. The project was completed in 2020 after additional costs of...

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a...

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,050,000. During 2021, costs of $2,020,000 were incurred, with estimated costs of $4,020,000 yet to be incurred. Billings of $2,524,000 were sent, and cash collected was $2,270,000. In 2022, costs incurred were $2,524,000 with remaining costs estimated to be $3,630,000. 2022 billings were $2,774,000, and $2,495,000 cash was collected. The project was completed in 2023 after additional costs of...

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a...

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,150,000. During 2018, costs of $2,050,000 were incurred with estimated costs of $4,050,000 yet to be incurred. Billings of $2,550,000 were sent, and cash collected was $2,300,000. In 2019, costs incurred were $2,550,000 with remaining costs estimated to be $3,675,000. 2019 billings were $2,800,000 and $2,525,000 cash was collected. The project was completed in 2020 after additional costs of...

Subjects