Easy Decorating uses a job order costing system to collect the costs of its interior decorating business

E2-13 Easy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.

Budgeted overhead $960,000
Actual overhead $982,800
Budgeted decorator hours 40,000
Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.

Required:
a) Compute the predetermined overhead rate.
b) Prepare the entry to apply the overhead for the year.
c) Determine whether the overhead was under- or overapplied and by how much.

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Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs

Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $78,400. There was no finished-goods inventory on this date.

BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2,100,000 and $2,730,000, respectively.

Actual results for the year follow.

Direct material used................................. $2,800,000
Direct labor ................................................. 2,175,000
Indirect material used ................................... 32,500
Indirect labor ............................................. 1,430,000
Factory depreciation..................................... 870,000
Factory insurance .......................................... 29,500
Factory utilities ............................................ 415,000
Selling and administrative expenses ...... 1,080,000
Total ............................................ $8,832,000

Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or over applied overhead to Cost of Goods Sold.

1. Determine the company’s predetermined overhead application rate.
2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
3. Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20x4, balance sheet.
4. Prepare the journal entry needed to record the year’s completed production.
5. Compute the amount of under- or over-applied overhead at year-end, and prepare the necessary journal entry to record its disposition.
6. Determine BBBC’s 20x4 cost of goods sold.
7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.

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Godwin Fixtures Co. uses a job order cost system

Problem 19-2A (Pr19-2A) Godwin Fixtures Co. uses a job order cost system. The following data summarize the operations related to production for April 2008, the first mouth of operations:
a.) Materials purchased on account, $137,000.
b.) Materials requisitioned and factory labor used:
Job Materials Factory
No.601 $ 18,100 $17,000
No.602 20,000 25,500
No.603 13,050 9,700
No.604 34,500 33,550
No.605 15,700 14,800
No.606 17,800 18,300
For general factory use 6,600 47,000
c.) Factory overhead cost incurred on account, $4,950.
b.) Depreciation of machinery and equipment, $3,700.
c.) The factory overhead rate is $53 per machine hour. Machine hours used:
Job Machine Hours
No.601 215
No.602 230
No.603 175
No,604 300
N0.605 198
No.606 225
TOTAL 1,343
f.) Jobs completed: 601,602,603and 605.
g.) Jobs were shipped and customers were billed as fallows: Job 601,$72,750;Job 602,$88,780;Job 605,$74,500.

Instructions:
1.) Journalize the entries to record the summarized operations.
2.) Post the appropriate entries to t accounts for work in process and finished goods, using the identifying letters as dates. Insert memorandum account balances as of the end of the month.
3.) Prepare a schedule of unfinished jobs to support the balance in work in process account.
4.) Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.  

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3-33 (Job costing for services) The Hillman Company sells and services lawn mowers snow blowers and other equipment

3-33 (Job costing for services) The Hillman Company sells and services lawn mowers snow blowers and other equipment. The service department uses job order cost system to determine costs of each job, such as oil changes, tune-ups, and repairs. The department assigns conversion costs through a cost driver rate on the basis of direct labor hours. The cost driver rate additionally includes a markup of 25% on the job’s conversion costs in order to provide a reasonable profit for Hillman. The customer’s invoice itemizes prices for parts and labor, where the stated labor rate is the department’s cost driver rate that includes direct labor cost, assigned overhead costs, and the 25% markup on conversion costs. Hillman Company’s service department estimated the following information for 2006. Salaries of mechanics $120,000 Fringe benefits 54,000 General and administrative 18,000 Depreciation 42,000 Billable direct labor hours 4,500
a. Determine Hillman Company’s service department’s cost driver rate to be used to assign conversion costs on the basis of billable direct labor hours.
b. Job 254 required $47.40 of materials and 0.7 direct labor hours. Determine the price changed for job 254.

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