Job Costing - Question At Bottom Elite Custom Cabinetry Company produces custom

Question

Job Costing - Question At Bottom   
                  
Elite Custom Cabinetry Company produces custom cabinets ordered to exact measure based on CAD drawings provided by kitchen remodeling firms.                   
As of June 1, there was one order in production (job 5-3), and two new jobs were started in June (jobs 6-1 and 6-2).                   
                  
Job 5-3 had incurred costs as follows prior to the month of June: direct material, $4,600; direct labor, $6,550; overhead, $3,400.                   
                  
There were no finished goods, because orders ship out upon completion. Raw material inventory was $18,600 as of June 1.                   
                  
The following events occurred during June:                   
1. Purchased additional raw materials of $20,000.                   
2. Incurred direct labor hours of 640 hours at a rate of $24.00 during the month of June.                   
3. Incurred total manufacturing overhead costs of $18,400 during the month of June.                   
4. Assigned Direct materials and direct labor hours to jobs as follows:                   
           Actual       
       Materials    Hours       
   Job 5-3    2,300    112       
   Job 6-1    8,700    320       
   Job 6-2    5,420    208       
   Totals    16,420    640       
5. The company uses direct labor hours to assign overhead to individual jobs, and the predetermined                   
overhead rate is $28.00 per hour, based on the budget of 600 labor hours per month.                   
6. Job 5-3 and 6-1 are completed and shipped in the month of June. Job 6-2 is in progress at month end.                   
     

Please Calculate Each:   
A. Calculate the completed cost of jobs 5-3 and 6-1.                   
B. Calculate the cost of work in process (job 6-2).                   
C. Calculate over or under applied overhead for hours worked and rate per hour.                   
D. Calculate the actual overhead rate per hour.                   

Explanation / Answer

A.

B.

16392

C.

D.Actual overhead rate per hour = $ 18,400/640hours = $ 28.75 per hour

Job Job 5-3 ($) Job 6-1 ($) Opening WIP Direct Material 4600 0 Direct Labour 6550 0 Overhead 3400 0 Assigned cost during the month jun Material 2300 8700 Labour 2688 7680 Overhead 3220 9200 Completed cost 22758 25580 Note: Overhead cost per Hour = $ 18,400/640 hours= $ 28.75 per hour

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