Question

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 $8,770, and Job 94 with a beginning balance of $7,300. Jagjit applies overhead at the rate of $10 per direct labor hour. Direct labor wages average $17 per hour. Data on August costs for all jobs are as follows: Job 93 Job 94 Job 95 Job 96 Direct materials $990 $4,530 $3,300 $1,280 Direct labor cost 2,380 5,100 2,550 1,020 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 2. Calculate the overhead applied to each job during the month of August. 3. Prepare job-order cost sheets for each job as of the end of August 4. Calculate the balance in Work in Process on August 31. 5. What is the price of Job 93? 6. CONCEPTUAL CONNECTION: Partway through the year, Jagit bought a bulldozer to handle farger jobs. The bulldozer cost $35,300 and is needed for larger commercial jobs. Smaller residential jobs can still be done with the smaller bobcat tractor. How could the bulldozer's cost be applied to only those jobs that need the larger equipment?

Answer 1

Solution:

1.) The number of direct labor hours:

Job 93	140 ($2,380 ÷ $17 per hour)	DLH
Job 94	300 ($5,100 ÷ $17 per hour)	DLH
Job 95	150 ($2,550 ÷ $17 per hour)	DLH
Job 96	60 ($1,020 ÷ $17 per hour)	DLH

2.)

Job 93	$1,400 ($10 × 140)
Job 94	$3,000 ($10 × 300)
Job 95	$1,500 ($10 × 150)
Job 96	$600 ($10 × 60)

3.)

Jagjit Company

Job Order Cost Sheet

August 31

	Job 93	Job 94	Job 95	Job 96
Beginning balance	$8,770	$7,300
Direct materials	$990	$4,530	$3,300	$1,280
Direct labor	$2,380	$5,100	$2,550	$1,020
Overhead	$1,400	$3,000	$1,500	$600
Total	$13,540	$19,930	$7,350	$2,900

4.)

The work in process balance on August 31 is $30,180.

Balance of work in process:

Job 94	$19,930
+ Job 95	$7,350
+ Job 96	$2,900
Total	$30,180

5.)

Price of job 93:

Cost of Job 93	$13,540
Billed at cost plus 40% ($13,540 × 40%)	$5,416
Total price of Job 93	$18,956