Question

Number 2 Larry's Lawn Services provides custom landscaping for homes and businesses and uses job order costing to capture the cost of its landscaping jobs. There are no jobs in process at the beginning of May. Listed below are data concerning the three landscaping jobs conducted during May Rocky Heights $6,480 $5,525 85 Oceanview $7,635 $5,980 92 Southside $5,450 $4,810 Direct materials Landscaper labor costs Landscaper hours 74 Overhead costs are applied to jobs on the basis of landscaper hours, and the predetermined overhead rate is $60 per landscaper hour. The Southside job is the only incomplete job at the end of May. Actual overhead for the month was $15,400. Instructions (a) Determine the cost of each job. Indicate the balance of the Landscape Contracts in Process account at the end of May (b) Calculate the ending balance of the Operating Overhead account for May. (c) (d) During May, Larry is approached by the owner of Mountain Estates who would like t contract with Larry's company. Larry is working to prepare the bid for Mountain Estates and has the following information: Direct materials, $10,450 and Landscap hours, 125 hours. Analyze the financial information provided for Southside, Oceanview and Rocky Heights and help Larry complete his bid by estimating the total cost of the Mountain Estates job.

Answer 1

a.	Cost of each Job:
					Southside	Oceanview	Rocky heights
	Direct materials				5450	7635	6480
	Landscaper labor costs				4810	5980	5525
	Overhead costs				4440	5520	5100
	(Landscaper hours*Predetermined OH Rate)				(74*60)	(92*60)	(85*60)
	Total cost				14700	19135	17105
b.	Landscape contracts in process balance=Cost of incomplete job=Cost of southside=$ 14700
c.	Actual overhead=$ 15400
	Overhead applied=4440+5520+5100=$ 15060
	Ending balance of operating overhead account=15400-15060=$ 340
d.	Landscaper labor cost per landscaper hour=Landscaper labor costs/Landscaper hours
					Southside	Oceanview	Rocky heights
	Landscaper labor costs			a	4810	5980	5525
	Landscaper hours			b	74	92	85
	Landscaper labor cost per landscaper hour (a/b)				65	65	65
	Total cost of the Job:
					$
	Direct materials				10450
	Landscaper labor costs				8125
	(Landscaper hours*Landscaper Rate per hour)				(125*65)
	Overhead costs				7500
	(Landscaper hours*Predetermined OH Rate)				(125*60)
	Total				26075
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