Chapter 17: 17-1SE-d (page 938)
Distinguishing between job order costing and process costing
Would the following companies most likely use job order costing or process costing?
d. A professional service firm
A professional service firm is most likely to use a job-order costing system.
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Question: Wesson Company is a consulting firm. The firm expects to have \(45,000 in indirect costs during the year and bill customers for 6,000 hours. The cost of direct labor is \)75 per hour.
16. Calculate the predetermined overhead allocation rate for Wesson using estimated billable hours for the allocation base.
17. Wesson completed a consulting job for George Peterson and billed the customer for 15 hours. What was the total cost of the consulting job?
18. If Wesson wants to earn a profit equal to 60% of the cost of a job, how much should the company charge Mr. Peterson?
Selected cost data for Classic Print Co. are as follows:
Estimated manufacturing overhead cost for the year | $125,000 |
Estimated direct labor cost for the year | 78,125 |
Actual manufacturing overhead cost for the year | 116,000 |
Actual direct labor cost for the year | 67,000 |
Requirements
3. Use a T-account to determine the amount of underallocated or overallocated
manufacturing overhead.
June production generated the following activity in Bentley Chassis Company’s Work-in-Process Inventory account:
June 1 balance | \(36,000 |
Direct materials used | 32,000 |
Direct labor assigned to jobs | 40,000 |
Manufacturing overhead allocated to jobs | 28,000 |
Additionally, Bentley Chassis has completed Jobs 142 and 143, with total costs of
\)37,000 and $48,000, respectively.
Requirements
1. Prepare the journal entry for production completed in June.
Journalize the following labor-related transactions for Portland Glass Creations at its plant in Portland, Oregon. Assume that the labor has been incurred, but not yet paid.
The T-account showing the manufacturing overhead activity for Aliyah Corp. for 2018 is as follows:
Manufacturing overhead
| 195000 | 203,000 |
Requirements
3. Is manufacturing overhead underallocated or overallocated? By how much?
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