Question

Applying Overhead to Jobs, Costing Jobs Gorman Company builds internal conveyor equipment to client specifications. On October 1, Job 877 was in process with a cost of $18,690 to date. During October, Jobs 878, 879, and 880 were started. Data on costs added during October for all jobs are as follows: Job 877 Job 878 Job 879 Job 880 Direct materials $14,380 $5,970 $3,510 $1,770 Direct labor 14,600 8,500 2,200 2,400 Overhead is applied to production at the rate of 75% of direct labor cost. Job 877 was completed on October 28, and the client was billed at cost plus 50%. All other jobs remained in process. Required: 1. Prepare a brief job-order cost sheet showing the October 1 balances of all four jobs, plus the direct materials and direct labor costs during October. There is no need to calculate applied overhead at this point or to total the costs. 2. Calculate the overhead applied to each job during October 3. Calculate the balance in Work in Process on October 31.

Answer 1

1

Job order cost sheet

From the month of October

Particulars	Job 877	Job 878	Job879	Job880
Beginning balance	$18690
Direct material	$14380	$5970	$3510	$1770
Direct labour	$14600	$8500	$2200	$2400
total	$47670	$14470	$5710	$4170

2 calculate overhead applied to each job during October

           

Particular	Direct labour cost	Overhead rate	Applied overhead
Job 877	$14600	75%	$10950
Job 878	$8500	75%	$6375
Job 879	$2200	75%	$1650
Job 880	$2400	75%	$1800

3 calculate balance working process on October 31.

Particulars	Job878	Job879	Job880	total
Beginning balance
Direct materials	$5970	$3510	$1770	$11250
Direct labour	$8500	$2200	$2400	$13100
Applied overhead	$6375	$1650	$1800	$9825
Ending working process on October 31	$20845	$7360	$5970	$34175

           

            Note: job877 was completed on October 28, hence, working process for job877 is 0

4 price of job 877

Beginning	$18690
Direct material	$14380
Direct labour	$14600
Applied overhead	$10950
Total cost of job 877	$58620
50% of cost	$29310
Price of job 877	$87930