Question

Grant Marwick 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 Rondelli Preston Lopez Direct materials: $900 $600 $300 Auditor labor costs: $5,900 $6,600 $3,700 Auditor hours: 72 88 Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $50 per auditor hour. The Rondelli job is the only incomplete job at the end of November. Actual overhead for the month was $10,700. How much is cost of Preston? 1) $7,200 2) $11,600 3) $4,400

urgent thanks!

Answer 1

Cost to preston = $600 + $6,600 + ($50 X 88) = $11,600

2) option

November ending balance of work in process = $900 + $5,900 + ($50 X 72) = $10,400

2) option

Applied overhead = (72 + 88 + 45) X $50 = $10,250

Actual overhead = $10,700

Actual overhead is more than applied overhead. Overhead is Underapplied. Underapplied over has a debit balance.

Ending balance of manufacturing overhead = $10,700 - $10,250 = $450 debit balance

$8,000 service provided but cash is not received. Debit accounts receivable and credit service revenue.

2) Option