Question

Biotechnologies Unlimited, Inc. (BUI), located in Sydney, Nova Scotia, is a small but growing biotech quality analysis organization that tests pesticides before they are used by farmers. The testing procedures are specific to the individual pesticides used because reagents used for testing react differently based on their composition and the quantity used. How they are introduced into the pesticides for testing is also important.

       During the month of December 2014, it completed one job (reference number: KS 2014-337); records pertaining to this job are as follows:

Date	Document	Amount
2/12/14	M-3316	$	910
4/12/14	L-4423		740
11/12/14	L-4437		1,340
13/12/14	M-3399		1,930
20/12/14	M-3407		1,150
22/12/14	L-4509		1,810

The documents with the references M and L pertain to direct materials and direct labour, respectively. BUI currently allocates overhead using direct labour cost as the allocation base. For the year 2014, it estimated $648,970 as the overhead amount and $511,000 for direct labour costs.

Questions:

A) Compute the overhead allocation rate for 2014.
B) Compute the total costs of the job. (Round "Overhead" answer to 2 decimal places.)

C) Prepare a job cost sheet for job KS 2014-337.

Answer 1

A)

overhead allocation rate for 2014 = Estimated overheads/Estimated direct labor costs

= 648,970/511,000

= $1.27 per direct labor dollar

B)

Direct material cost = 910 + 1,930 + 1,150

= $3,990

Direct labor cost = 740 + 1,340 + 1,810

= $3,890

Applied overhead = Direct labor cost x overhead allocation rate

= 3,890 x 1.27

= $4,940.3

C)

Job cost sheet

Direct material	3,990
Direct labor	3,890
Overhead applied	4,940.3
Total cost	$12,820.3