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 | $56,250 | Number of moves | 2,500 | ||
Engineering | 142,500 | Number of change orders | 9,500 | ||
Other overhead | 209,100 | 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 | $21,400 | $19,400 | $4,500 | $0 | ||||
Direct materials | $5,600 | $9,700 | $12,700 | $9,600 | ||||
Direct labor cost | $810 | $990 | $1,700 | $110 |
Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |||||
Number of moves | 43 | 48 | 27 | 7 | ||||
Number of change orders | 32 | 44 | 24 | 15 | ||||
Direct labor hours | 810 | 990 | 1,700 | 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 |
Feedback
1. In job-order costing, departmental overhead rates and activity-based costing affect only the application of overhead which is put on the job-order costing sheet and must include all drivers for which overhead is applied.
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?
$ lower
1) | Activity rates | |||||||
Materials handling rate | 22.5 | per move | ||||||
engineering rate | 15 | per change order | ||||||
other overhead rate | 4.1 | per direct labor hour | ||||||
2) | Job order cost sheet | |||||||
job 13-43 | job 13-44 | job13-45 | job 13-46 | |||||
Balance,july 1 | 21,400 | 19,400 | 4,500 | 0 | ||||
direct materials | 5,600 | 9,700 | 12,700 | 9,600 | ||||
direct labor cost | 810 | 990 | 1700 | 110 | ||||
materials handling | 968 | 1080 | 608 | 158 | ||||
engineering | 480 | 660 | 360 | 225 | ||||
other overhead | 3321 | 4059 | 6970 | 451 | ||||
total | 32,579 | 35,889 | 26,838 | 10,544 | ||||
3) | Balance of work in process july 31 | 37,381 | ||||||
(job 45 and job 46) | ||||||||
4) | cost of goods sold for july | 68,468 | ||||||
(job 43 and 44) | ||||||||
5) | difference in cost will be | 225 | ||||||
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