Question

Che Heritage Gardens provides complete garden design and landscaping services. The company uses a job-order costing system to track the costs of its landscaping projects. The table below provides data concerning the three landscaping projects that were in progress during May. There was no work in process at the beginning of May. Designer-hours Direct materials Direct labor Project Williams Chandler Nguyen 320 200 240 $6,000 $ 3,000 $ 4,800 $ 3,600 $2,200 $ 2,700 Actual overhead costs were $35,000 for May. Overhead costs are applied to projects on the basis of designer-hours because most of the overhead is related to the costs of the garden design studio. The predetermined overhead rate is $57 per designer hour. The Williams and Chandler projects were completed in Maythe Nguyen project was not completed by the end of the month. No other jobs were in process during May. Required: 1. Compute the amount of overhead cost that would have been applied to each project during May. Williams Chandler Nguyen Overhead cost 2. Determine the cost of goods manufactured for May Cost of goods manufactured

Answer 1

1) Overhead cost applied

	WIlliam	Chandler	Nguyen
Overhead cost applied	320*57 = 18240	11400	13680

2) Cost of goods manufactured

	William	Chandler
Direct material	6000	3000
Direct labor	3600	2200
Overhead	18240	11400
Total Cost	27840	16600

Cost of goods manufactured = 27840+16600 = 44440

3) Cost of goods sold = 21180

4) Applied overhead = 43320

Actual overhead = 35000

Over applied overhead = 43320-35000 = 8320