Question

ABC Company began operations during 2022 and employs a job-order costing system with departmental overhead rates....

ABC Company began operations during 2022 and employs a
job-order costing system with departmental overhead
rates. Overhead from both Department A and Department B
is assigned to jobs on the basis of direct labor hours.
Below is a summary of events and transactions that
occurred during 2022:

a.  ABC Company had the following estimates for 2022:

                        Dept. A      Dept. B       Total
Overhead cost           $136,500     $192,000     $328,500
Direct labor hours        14,000       16,000       30,000

b.  ABC Company began work on three jobs. Information
    about these three jobs appears below:

                             Job #1      Job #2      Job #3
Direct materials used      $ 71,400    $122,000    $103,000
Direct labor cost          $117,600    $ 93,600    $100,800       
DL hours in Dept. A           5,200       3,600       3,200
DL hours in Dept. B           4,600       4,200       5,200  

c.  Job #1 and Job #3 were completed during 2022. Job #2
    was not completed. In addition, Job #1 was sold during
    2022 whereas Job #3 was not sold.

d.  When Job #1 was sold to the customer, ABC Company charged
    the customer 150% of the total cost to manufacture Job #1.

Calculate ABC Company's work in process inventory balance at
December 31, 2022.
Calculate the total selling price charged to the customer for
Job #1.
Business   Accounting   
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Homework Answers

Answer #1
OH rate
Deptt A Deptt B
Overheads cost 136500 192000
Divide Total DLH 14000 16000
OH rate per DLH 9.75 12
Job 1 Job 2 Job 3
Direct material cost 71400 122000 103000
Direct labour cost 117600 93600 100800
Overheads applied
Deptt A(@ 9.75 per DLH) 50700 35100 31200
Depttt B (@12 per DLH) 55200 50400 62400
Total cost 294900 301100 297400
Total cost of Job 1 294900
Add: Mrkup @50% 147450
Selling price charged for Job 1 442350
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