Question

Biotechnologies Unlimited, Inc. (BUI), located in Sydney, Nova Scotia, is a small but growing biotech quality analysis organization that tests pesticides before they are used by farmers. The testing procedures are specific to the individual pesticides used because reagents used for testing react differently based on their composition and the quantity used. How they are introduced into the pesticides for testing is also important During the month of December 2014, it completed one job (reference number: KS 2014-337), records pertaining to this job are as follows: Date 2/12/14 4/12/14 11/12/14 13/12/14 20/12/14 22/12/14 Document M-3316 L-4423 L-4437 M-3399 Amount $ 750 440 250 1,000 320 750 M-3407 L-4509 The documents with the references M and L pertain to direct materials and direct labour, respectively. BUI currently allocates overhead using direct labour cost as the allocation base. For the year 2014, it estimated $548,730 as the overhead amount and $469,000 for direct labour costs. Required: 1. Compute the overhead allocation rate for 2014. Predetermined overhead rate 2. Compute the total costs of the job. (Round "Overhead" answer to 2 decimal places.)

Answer 1

Question 1

Since the overheads are allocated based on direct labor cost, we need to calculate the overhead rate as percentage of labor cost.

Predetermined overhead rate = Budgeted overheads / Budgeted labor cost *100

Predetermined overhead rate = 548,730/469,000*100 = 117% of direct labor cost

Question 2

Total cost of the job is as follows:

Particulars Direct materials (750+1000+320) Direct labor (440+250+750) Overhead (117% of direct labor) Total cost Amount ($) 2,070.00 1,440.00 1,684.80 5,194.80

Question 3

Job cost sheet Number KS2014-337 Date Intiated Dec 01, 2014 Department Commercial Date Completed May 23, 2014 Description I Pesticide Testing Units completed 1 Direct Materials Direct Labor Overhead Reg. No. Amount Time sheet Hours Amount DL Cost Rate L Amount M-3316 750.00 L-4423 440.00 1440 117 % 1,684.80 M-3399 1,000.00 L-4437 250.00 M-3407 320.00 L-4509 750.00 2,070.00 1,440.00 Cost Summary Job Completion Status Direct materials 2,070.00 Date Progress to date Direct labor 1,440.00 May 23, 2014 Completed Overhead 1,684.80 Total cost 5,194.80 Unit Cost 5,194.80