Question

Exercise 20-12 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. (a) Determine the cost of each job. Cost Lynn $ Brian $ Mike $ (b) Indicate the balance of the Service Contracts in Process account at the end of November. Balance in service contracts in process account $ (c) Calculate the ending balance of the Operating Overhead account for November. Balance in operating overhead account $

Answer 1

a)
			Lynn	Brian	Mike	total
Direct materials			600	400	200	1200
direct labor			5,400	6,600	3,375	15,375
overhead applied			3600	4400	2250	10250
Cost of each job			9600	11400	5825	26825	answer
b)	Balance in process account
	11400+5825
	17225	answer
c)	Balance in operating overhead account
	Actual overhead - applied overhead
	11,000-10,250
	750	Answer