Question

Applying Overhead to Jobs, Costing Jobs

Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process: Job 93 with a beginning balance of $8,800 and Job 94 with a beginning balance of $7,240. Jagjit applies overhead at the rate of $10 per direct labor hour. Direct labor wages average $16 per hour. Data on August costs for all jobs are as follows:

	Job 93	Job 94	Job 95	Job 96
Direct materials	$930	$4,520	$3,400	$1,260
Direct labor cost	2,240	4,800	1,920	960

During August, Jobs 95 and 96 were started. Job 93 was completed on August 17, and the client was billed at cost plus 40%. All other jobs remained in process.

Required:

1. Calculate the number of direct labor hours that were worked on each job in August.

Job 93	DLH
Job 94	DLH
Job 95	DLH
Job 96	DLH

2. Calculate the overhead applied to each job during the month of August.

Job 93	$
Job 94	$
Job 95	$
Job 96	$

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1. For each job divide the labor cost by the labor rate.

2. Multiply the applied overhead rate by the labor hours for each job.

3. Prepare job-order cost sheets for each job as of the end of August. All amount cells must have an entry; enter zeros as needed.

Jagjit Company
Job-Order Cost Sheets
August 31
	Job 93	Job 94	Job 95	Job 96
Beginning balance	$	$	$	$
Direct materials
Direct labor
Applied overhead
Total	$	$	$	$

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Incorrect

4. Calculate the balance in Work in Process on August 31.
The work in process balance on August 31 is $.

5. What is the price of Job 93?
The price of Job 93 is $.

6. CONCEPTUAL CONNECTION: Part way through the year, Jagjit bought a bulldozer to handle larger jobs. The bulldozer cost $38,500 and is needed for larger commercial jobs. Smaller residential jobs can still be done with the smaller bobcat tractor.

Complete the statement below that outlines how the bulldozer’s cost could be applied to only those jobs that need the larger equipment.

Create a separate department  for the acquisition and use of the bulldozer. Treat the bulldozer’s depreciation, fuel, maintenance, etc. as total budgeted cost . Divide this by the anticipated annual hours of use to arrive at the overhead rate .

Answer 1

The answer has been presented in the supporting sheet. First 4 parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) 3 The number of direct Labour Hours 4 Job 93 140 (2240/16) 6 Job 94 300 (4800/16) 8 Job 95 (1920/16) 10 Job 96 60 (960/16) 13 Part 2) 14 The overheads applied 15 Job 93 1400 (140*10) 17 Job 94 3000 (300*10) 19 Job 95 1200 (120*10) 21 Job 96 (60*10) 600

28 24 Part 3) 25 Jagjit Company 26 Job order Cost Sheet 27 Aug-31 Job 93 Job 94 Job 95 Job 96 29 Beginning 8800 7240 30 Direct Ma 9300 4520 3400 1260 31 Direct Lab 2240 4800 1920 960 32 Overhead 14001 3000 1200 600 33 Total 13370 19560 6520 2820 35 Part 4) 36 Balance of work in process 37 = job 94+ job 95+ job 96 38 = 19560 +6520+2820 39 = $ 28900 40 41 Thus the balance of work in process = $ 28900 42 43 As per HomeworkLib policy we are required to solve the first 4 parts only. For remaining parts you have to post separate question.