Question

Job Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost Driver Amount of Driver Materials handling $49,400 Number of moves 2,000 Engineering 129,000 Number of change orders 7,500 Other overhead 321,300 Direct labor hours 51,000 Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44 Job 13-45 Job 13-46 Beginning balance $23,200 $19,600 $3,900 $0 Direct materials $5,300 $9,800 $13,700 $9,700 Direct labor cost $950 $1,030 $1,560 $110 Job 13-43 Job 13-44 Job 13-45 Job 13-46 Number of moves 47 48 27 4 Number of change orders 29 35 22 21 Direct labor hours 950 1,030 1,560 110 By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process. Required: 1. Calculate the activity rates for each of the three overhead activities. Round all activity rates to the nearest cent. Materials handling rate $ per move Engineering rate $ per change order Other overhead rate $ per direct labor hour 2. Prepare job-order cost sheets for each job showing all costs through July 31. When required, round your answers to the nearest dollar. If an amount is zero, enter "0". Heitger Company Job-Order Cost Sheets Job 13-43 Job 13-44 Job 13-45 Job 13-46 Balance, July 1 $ $ $ $ Direct materials Direct labor cost Materials handling Engineering Other overhead Total $ $ $ $ 3. Calculate the balance in Work in Process on July 31. $ 4. Calculate the cost of goods sold for July. $ 5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46? $ How would the cost of the other jobs be affected?

Answer 1

Solution: Part 1: Activity Cost Materials handling Engineering Other overhead Amount of Driver Activity rate c=a/b 49400 2000 24.70 per move 129000 7500 17.20 per change order 321300 51000 6.30 per direct labor hour Part 2: Heitger Company Job-Order Cost Sheets Balance, July 1 Direct materials Direct labor cost Materials handling ** Engineering** Other overhead** Total Job 13-43 Job 13-44 23200 5300 950 1161 499 Job 13-45 Job 13-46 19600 3900 9800 13700 1030 1560 1186 667 602 378 6489 38707 30033 361 693 5985 9828 37095 10963 * working for part 2 Activity level Job 13-44 Job 13-45 Activity rate Job 13-43 Cost assigned Job 13-46 Job 13-43 Job 13-44 Job 13-45 Job 13-46 f=a*b g=a*c h=a*d i=a*f 11611186 667 99 22 21 499 6 02 378 361 1560 11059856489 1101 9828 693 Materials handling Engineering Other overhead - 24.70 17.20 6.30 17.30 2935 950 1030 Part 3: Job 13-45 Job 13-46 balance in Work in Process on July 31. 30033 10963 40996 Part 4: Job 13-43 Job 13-44 cost of goods sold for July 37095 38707 75801 Part 5: What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46? $ 361 Lower How would the cost of the other jobs be affected? no effect