Exam 4: Job Costing

The Dougherty Furniture Company manufactures tables. In March, the two production departments had budgeted allocation bases of 4,000 machine hours in Department 100 and 8,000 direct manufacturing labour hours in Department 200. The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job A, the actual costs incurred in the two departments were as follows: Job A incurred 800 machine hours in Department 100 and 300 manufacturing labour hours in Department 200. The company uses a budgeted indirect cost allocation rate for applying overhead to production. Required: a. Determine the budgeted manufacturing indirect cost allocation rate for each department. b. Prepare the necessary journal entries to summarize the March transactions for Department 100. c. What is the total cost of Job A?

It is not a requirement to identify the indirect costs associated with each job when assigning costs to individual jobs.

Sambell Manufacturing uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs. At the beginning of the year, the company expected to incur the following: At the end of the year, the company had actually incurred the following: Required: 1. Compute Trident's indirect cost allocation rate based on labour cost. 2. Compute Trident's indirect cost allocation rate based on machine hours. 3. How much overhead was allocated during the year if the allocation base was direct labour cost? 4. How much manufacturing overhead was incurred during the year?

A wholesale automobile company that buys and resells cars has the following data for June: Required: a. Compute the costing rates for each cost assignment category using both actual and budget costing techniques. b. Calculate the total cost assigned to the each vehicle sold under each costing rate method.

A local attorney employs ten full-time professionals. The budgeted compensation per employee is $80,000. The maximum billable hours for each client are 400. Clients always receive their full amount of time. All professional labour costs are included in a single direct cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $400,000 and the firm had 20 clients. Required: a. What is the direct labour budgeted cost rate per hour? b. What is the indirect cost pool budgeted cost rate per hour?

Fixed and variable costs may be allocated to a cost object.

Use the information below to answer the following question(s). Jim's Computer Products manufactures keyboards for computers. In June, the two production departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000 direct manufacturing labour hours in Department 2. The budgeted manufacturing overheads for the month were $34,500 and $37,500, respectively. For Job 501, the actual costs incurred in the two departments were as follows: Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labour hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production. -In the service sector,

Process costing is a useful system for tracking the costs of building a house.

What is the difference between an actual cost system and a normal cost system?

What would be the new budgeted direct cost rate if they decided to give all of the dental assistants a 10% raise?

Actual costing traces direct costs to a cost object by multiplying the budgeted direct cost rate and the actual quantity.

A local engineering firm is bidding on a design project for a new client. The total budgeted direct labour costs for the firm are $800,000. The total budgeted indirect costs are $1,200,000. It is estimated that there are 16,000 billable hours in total. Required: a. What is the budgeted direct labour cost rate? b. What is the budgeted indirect cost allocation rate assuming direct labour cost is the cost allocation base? c. What should be the engineering firm bid on the project if the direct labour hours are estimated at 500 hours?

Fixed costs remain constant at $200,000 per month. During high-output months variable costs are $160,000, and during low-output months variable costs are $40,000. What are the respective high and low indirect cost allocation rates if professional labour-hours are 8,000 for high-output months and 2,000 for low-output months?

Many large companies which have multiple production methods and processes have hybrid costing systems that are

Underallocated indirect costs cannot occur when normal costing is used.

Jordan Company has two departments, X and Y. Overhead is applied based on budgeted direct labour cost in Department X, and budgeted machine hours in Department Y. The following additional information is available. Required: a. Compute the budgeted factory indirect cost allocation rate for Department X. b. Compute the budgeted factory indirect cost allocation rate for Department Y. c. What is the total overhead cost of Job 10? d. If Job 10 consists of 50 units of product, what is the unit cost of this job?

Cowley County Hospital uses a job-costing system for all patients who have surgery. In March, the Pre-Operating Room (PRE-OP) and Operating Room (OR) had budgeted allocation bases of 4,000 nursing hours and 2,000 nursing hours, respectively. The budgeted nursing overhead costs for each department for the month were $168,000 and $132,000, respectively. The hospital floor for surgery patients had budgeted overhead costs of $1,200,000 and 15,000 nursing hours for the month. For patient Fred Adams, actual hours incurred were eight and four hours, respectively, in the PRE-OP and OR rooms. He was in the hospital for 4 days (96 hours). Other costs related to Adams were: The hospital uses a budgeted overhead rate for applying overhead to patient stays. Required: What is the total cost of the stay of patient Fred Adams?

Copley Enterprises manufactures digital video equipment. For each unit $1,475 of direct material is used and there is $1,500 of direct manufacturing labour at $30 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labour hour. Calculate the cost of each unit.

Explain how a budgeted indirect cost allocation rate is determined.

Instead of proration, a company could choose to simply write-off the balance of any underallocated overhead to cost of goods sold providing the amount is immaterial.