Question

# Determine cost of jobs and ending balance in work in process and overhead accounts. (LO 2,...

Determine cost of jobs and ending balance in work in process and overhead accounts. (LO 2, 3, 4), AP Don Lieberman and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November.

 Lynn Brian Mike Direct materials \$600 \$400 \$200 Auditor labor costs \$5,400 \$6,600 \$3,375 Auditor hours 72 88 45

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is \$50 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was \$11,000.

Instructions

(a) Determine the cost of each job.

(b) Indicate the balance of the Service Contracts in Process account at the end of November.

(c) Calculate the ending balance of the Operating Overhead account for November

 a Lynn 9600 Brian 11400 Mike 5825 b Balance in service contracts in process account 9600 c Balance in operating overhead account 750 Underapplied
 Workings: Lynn Brian Mike Total Direct materials 600 400 200 1200 Auditor labor costs 5400 6600 3375 15375 Overhead applied 3600 4400 2250 10250 Total cost 9600 11400 5825 26825 Actual overhead 11000 Less: Overhead applied 10250 Balance in operating overhead account 750 Lynn Brian Mike Overhead applied =72*50 =88*50 =45*50

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