Birmingham Contractors uses a job order costing system. In May 2013, the company
ID: 470276 • Letter: B
Question
Birmingham Contractors uses a job order costing system. In May 2013, the company made a $3,300,000 bid to build a pedestrian overpass over the beach highway at Gulf Shores, Alabama. Birmingham Contractors won the bid and assigned #515 to the project. Its completion date was set at December 15, 2013. The following costs were estimated for completion of the overpass: $1,240,000 for direct material, $670,000 for direct labor, and $402,000 for overhead.
During July, work began on job #515; DM cost assigned to Job #515 was $121,800, and DL cost associated with it was $175,040. The firm uses a predetermined
OH rate of 60 percent of DL cost. Birmingham Contractors also worked on several other jobs during July and incurred the following costs:
Direct material (including Job #515) issued $579,300
Direct labor (including Job #515) accrued 584,000
Indirect labor accrued 55,800
Administrative salaries and wages accrued 39,600
Depreciation on construction equipment 26,400
Depreciation on office equipment 7,800
Client entertainment (on accounts payable) 11,100
Advertising for firm (paid in cash) 6,600
Indirect material (from supplies inventory) 18,600
Miscellaneous expenses (design-related; to be paid in the following month) 10,200
Accrued utilities (for office, $1,800; for construction, $5,400) 7,200
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During July, Birmingham Contractors completed several jobs that had been in process before the beginning of the month. These completed jobs sold for $1,224,000, and payment will be made to the company in August. The related job cost sheets showed costs associated with those jobs of $829,000. At the beginning of July, Birmingham Contractors had Work in Process Inventory of $871,800.
C) Prepare a Cost of GoodsManufactured Schedule for July for Birmingham Contractors.
D) Assuming that the company pays income tax at a 40 percent rate, prepare an income statement for Birmingham Contractors.
Explanation / Answer
Ans:
Birmingham Construction finished a few occupations that had been in procedure before the start of the month. These finished employments produced $612,000 of incomes for the organization. The related occupation cost sheets demonstrated expenses connected with those employments of $414,500. Toward the start of July, Jackson Construction had Work in Process Inventory of $435,900.
c. Work in Process starting $435,900
Creation costs:
Direct material $289,650
Direct work 292,000
Connected overhead 175,200 756,850
$1,192,750
Work in procedure ending (778,250)
Expense of products made $414,500
d.
Jackson Construction Company
Pay Statement
For the Month Ended July 31, 2008
Incomes from finished projects $612,000
Less Cost of Goods Sold (414,500)
Gross Margin on Completed Jobs $197,500
Non Production Expenses:
Compensations and Wages Expense $19,800
Deterioration Expens 3,900
Utilities Expens 900
Deals Promotion Expense 5,550
Promoting Expense 3,300
Various Expense 5,100 (38,550)
Pay Before Income Taxes $158,950
Pay Taxes (63,580) Net Income $ 95,370
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