Accounting for a Job-Order Cost System [LO 3, 6, 7, 9] Bob and Beth Ford retired
ID: 1942654 • Letter: A
Question
Accounting for a Job-Order Cost System [LO 3, 6, 7, 9]Bob and Beth Ford retired from the food services industry and began catering wedding receptions on a limited basis. The major costs in setting up their business included: linens, $1,400; two complete silver services, $1,700; glass plates and cups, $1,800; and cake-decorating tools and accessories, $600. It is expected that all of these items will last 10 years with no salvage value. Bob and Beth do all their food preparation in their apartment and have found that, in an average month, their utility bill is $200 higher than when they did not cater. All baking and cooking supplies are treated as "direct materials," and the only other cost incurred is liability insurance at $2,000 per year. All direct materials are purchased at a local grocery for cash, and Bob and Beth pay themselves an hourly wage of $36 per hour. During the month of June, Bob and Beth catered five weddings.
Materials Labor Hours
Redfern wedding $520 26
Miller wedding 830 41
Walker wedding 674 24
DeSilva wedding 1,760 95
Estes wedding 630 32
The overhead allocation base is labor hours with an estimated 1,000 hours per year, and billings are at 120 percent of job cost. Overhead allocations and markups are rounded to the nearest dollar.
Prepare job cost sheets for each of the five catering jobs. (Round final answers to 2 decimal places, e.g. 5.25.)
Redfern Wedding
Materials $
Labor
Overhead
Total $
Miller Wedding
Materials $
Labor
Overhead
Total $
Walker Wedding
Materials $
Labor
Overhead
Total $
DeSilva Wedding
Materials $
Labor
Overhead
Total $
Estes Wedding
Materials $
Labor
Overhead
Total $
Calculate income for the month of June. (Enter answers to 2 decimal places, e.g. 5.25.)
$
Explanation / Answer
Linens 1400 Silver Services 1700 Glass Plates and Cups 1800 Cake Decorating Tools 600 Total Amount Invested 5500 Annual Depreciation 5500/ 10 550 Annual Utilities (200 *12) 2400 Total OverHeads 2950 Annual Estimated Hours 1000 Over Head Rate 2950 /1,000 $2.95 per hour Labor Cost Hours worked * 36 Overhead Hours worked * 2.95 Note: I separated topics by //// to make sure things are clear Job //// Material //// Labor //// Over Head //// Total Red Fern Wedding //// 520 //// 936 //// 76.7 //// 1532.7 Miller Wedding //// 830 //// 1476 //// 120.95 //// 2426.95 Walker Wedding //// 674 //// 864 //// 70.8 //// 1608.8 De Silva Wedding //// 1760 //// 3420 //// 280.25 //// 5460.25 Estes Wedding //// 630 //// 1152 //// 94.4 //// 1876.4 Total income = 12905.10
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