Exercise 12-8 Allocating costs among products L0 12-3 Jordan Construction Compan

Question

Exercise 12-8 Allocating costs among products L0 12-3 Jordan Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows Direct labor Direct aaterials 74,800 $ 99,680 $171,88 101,0e0 132,080 195,880 Assume Jordan needs to allocate two major overhead costs($51,600 of employee fringe benefits and $25,680 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) House Allocation Rate x Weight of Base-Allocated Cost Total Prey 10,3-ill/ Next > and Windows

Explanation / Answer

Apt Driver Fringe benefits Direct labor cost Indirect Material Direct material cost House 1 House 2 House 3 Total Direct Labor cost                         74,000        99,000        171,000        344,000 Direct Material Cost                      101,000      132,000        195,000        428,000 Apt Driver Cost Driver Allocation rate Allocation rate Fringe benefits Direct labor cost        51,600        344,000 51600/344000 15.00% Indirect Material Direct material cost        25,680        428,000 25680/428000 6.00% Fringe benefits allocation Allocation rate Weight Allocated cost House 1 15%        74,000           11,100 House 2 15%        99,000           14,850 House 3 15%      171,000           25,650 Total           51,600 Indirect Material allocation Allocation rate Weight Allocated cost House 1 6%      101,000             6,060 House 2 6%      132,000             7,920 House 3 6%      195,000           11,700 Total           25,680 Cost Components House 1 House 2 House 3 Total Direct labor                         74,000        99,000        171,000        344,000 Direct Material                      101,000      132,000        195,000        428,000 Fringe beneits                         11,100        14,850           25,650           51,600 Indirect Material                           6,060           7,920           11,700           25,680                      192,160      253,770        403,350        849,280

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