Exercise 20-12 Don Lieberman and Associates, a CPA firm, uses job order costing

Question

Exercise 20-12 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 Lynn Brian Mike Direct materials Auditor labor costs Auditor hours $710 $5,500 76 $500 $7,700 91 $230 $3,475 49 Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $57 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $12,600 (a) Determine the cost of each job Cost Lynn $ Brian Mike (b) Indicate the balance of the Service Contracts in Process account at the end of November Balance in service contracts in process account (c) Calculate the ending balance of the Operating Overhead account for November. Balance in operating overhead account s

Explanation / Answer

Req1 LYNN BRIAN MIKE Auditors hours 76 91 49 Direct material 710 500 230 Direct labour 5500 7700 3475 Overhead cost (@57 per auditor hour) 4332 5187 2793 Total cost of Jobs 10542 13387 6498 COST LYNN 10542 BRIAN 13387 MIKE 6498 Req2: Lynn Job is incomplete Therefore, Balance in Service contracts in Process $ 10,542 (Cost of Job Lynn) Req3: Ending balance of Overhead account Total Overhead Incurred 12,600 Less: Overhead absorbed in Jobs LYNN 4332 BRIAN 5187 MIKE 2793 Ending balance in Overhead account 288

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