Exercise 15-12
Partially correct answer. Your answer is partially correct. Try again.
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 $610 $470 $280
Auditor labor costs $6,000 $7,600 $3,575
Auditor hours 74 91 49
Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $55 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $13,800.
(a) Determine the cost of each job.
Cost
Lynn $Entry field with incorrect answer now contains modified data
3700
Brian $Entry field with incorrect answer
5005
Mike $Entry field with incorrect answer
2695
(b) Indicate the balance of the Service Contracts in Process account at the end of November.
Balance in service contracts in process account $Entry field with incorrect answer
13800
(c) Calculate the ending balance of the Operating Overhead account for November.
Balance in operating overhead account $Entry field with correct answer
2030
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Solution a:
| Computation of Job Cost | |||
| Particulars | Lynn | Brian | Mike |
| Direct materials | $610.00 | $470.00 | $280.00 |
| Auditors labor cost | $6,000.00 | $7,600.00 | $3,575.00 |
| Applied overhead cost | $4,070.00 | $5,005.00 | $2,695.00 |
| Job Cost | $10,680.00 | $13,075.00 | $6,550.00 |
Solution b:
Balance in service contracts in process account = Cost of Lynn job = $10,680
Solution c:
Balance in overhead account = Actual overhead incurred - Overhead applied = $13,800 - ($4,070 + $5,005 + $2,695) = $2,030 debit
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