Don Lieberman and Associates, a CPA firm, uses job order costing to capture the

Question

Don Lieberman and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November. Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $52 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $13,650. Determine the cost of each job. Lynn $ Brian $ Mike $ Indicate the balance of the Service Contracts in Process account at the end of November. Balance in service contracts in process account $ Calculate the ending balance of the Operating Overhead account for November. Balance in operating overhead account $

Explanation / Answer

a) Cost of each job:

b) Balance in Service Contratcs in Process Account at the end of November = Cost incurred in Lynn Audit = $11,072 (as calculated above in answer a)

c) Actual Overhead incurred = $ 13,650

Overhead absorbed in three job = $11,180 (as calculated above in answer a)

Net balance in Overhead Account = $2,470

Particulars Lynn Brian Mike Total Direct Material Cost $650 $420 $300 $1,370 Auditor Labor costs $6,470 $7,650 $4,100 $18,220 Overhead cost @ $52 per auditor hours $3,952 $4,680 $2,548 $11,180 Total Cost $11,072 $12,750 $6,948 $30,770

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