At the beginning of the month, Arthur\'s Olde Consulting Corporation had two job

Question

At the beginning of the month, Arthur's Olde Consulting Corporation had two jobs in process that had the following costs assigned from previous months:

During the month, Jobs SY-400 and SY-403 were completed but not billed to customers. The completion costs for SY-400 required $27,100 in direct labor. For SY-403, $81,500 in labor was used.

During the month, the only new job, SY-404, was started but not finished. Total direct labor costs for all jobs amounted to $151,170 for the month. Overhead in this company refers to the cost of work that is not directly traced to particular jobs, including copying, printing, and travel costs to meet with clients. Overhead is applied at a rate of 70 percent of direct labor costs for this and previous periods. Actual overhead for the month was $107,800.

Required:

a. What are the costs of Jobs SY-400 and SY-403 at the beginning of the month and when completed?

b. What is the cost of Job SY-404 at the end of the month?

c. How much was under- or overapplied service overhead for the month?

Explanation / Answer

Answer 1. Beginning of Month: SY-400 SY-403 Direct Labor      23,990.00      16,070.00 Overhead Applied - 70%      16,793.00      11,249.00 Beginning Balance Total      40,783.00      27,319.00 End of Month: Direct Labor      27,100.00      81,500.00 Overhead Applied - 70%      18,970.00      57,050.00 Ending Balance Total      86,853.00    165,869.00 Answer 2. SY-404 Direct Labor - $151,170 - ($27,100 + $81,500)      42,570.00 Overhead Applied - 70%      29,799.00 Balance Total      72,369.00 Answer 3. SY-400      18,970.00 SY-403      57,050.00 SY-404      29,799.00 Total Applied Overhead    105,819.00 Actual Overhead    107,800.00 Applied Overhead    105,819.00 Under-Applied Overhead        1,981.00

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