Question

Alpha Technology created and started Job No. 72, based on a customer’s order, on June 1. During June, $68,900 of direct materials were requisitioned for Job No. 72 and $5,500 of direct labor cost was incurred on Job No. 72. Manufacturing overhead is allocated at a rate of $16.00 per direct labor hour. Actual manufacturing overhead costs incurred in June amounted to $15,000. There were 700 actual direct labor hours worked in June. No new jobs were started during June. Job No. 72 is completed on June 28.

a. Determine the total cost assigned to Job No. 72.

b. Is manufacturing overhead overallocated or underallocated for the month of June? By how much?

c. What types of key decisions are made (by Management/Leadership in collaboration with Management Accountants) based upon information provided on the Job Cost record/sheet?

Answer 1

	1)	total cost assigned to job no 72
		Direct materials used				68,900
		direct labor				5,500
		overhead applied (16*700)				11200
		total cost assigned to job no 72				85,600
	2)	actual overhead				15,000
		overhead applied				11,200
		overhead under applied				3,800
	3)	1)	Pricing decision - at what price the job should be
			sold
		2)	cost controlling
		3)	to sell or process further