Question

2. A company has the following information for Job Alpha during July: Units produced Actual materials used (and purchased) 565 7,831 Ibs. $ 13.30 per pound Actual Materials Cost Actual labor hours incurred 2,978 Actual labor rate 38.00 per hour The company applies manufacturing overhead to jobs based on direct labor hours. Additional information for the company in July is as follows: 24,910 Total estimated labor hours unit 15.4 lbs. Standard mate rials per $ 12.10 per lb. Standard mate rials cost Standard labor hours per unit 6.20 $ 33.00 per hour Standard labor rate $ 6.60 per labor hour Standard variable overhead $ 4.40 per labor hour Standard fixed overhead 1,660 Actual total output in units 2,460 Actual total labor hours

a. If the company uses a normal costing system, calculate the costs incurred by Job Alpha in July.

b. If the company uses a standard costing system, calculate the costs incurred by Job Alpha in July.

Answer 1

Requirement a: Compute the costs incurred under normal costing system as follows

Particulars	Amount
Direct material (7,831 lbs. × $13.30 per lbs.)	$104,152.00
Direct labor (2,978 hours × $38 per hour)	$113,164.00
Overhead allocated (2,978 hours × ($6.60 + $4.40))	$32,758.00
Cost incurred for the job	$250,074.00

Requirement b: Compute the costs incurred under standard costing system as follows

Particulars	Amount
Direct material (565 units × 15.4 lbs. × $12.10 per lbs)	$105,282.10
Direct labor (565 units × 6.20 hours × $33 per hour)	$115,599.00
Overhead allocated (565 units × 6.20 hours × ($6.60 + $4.40))	$38,533.00
Cost incurred for the job	$259,414.10