Applying Overhead to Jobs, Costing Jobs Gorman Company builds internal conveyor equipment to client specifications. On October 1, Job 877 was in process with a cost of $18,650 to date. During October, Jobs 878, 879, and 880 were started. Data on costs added during October for all jobs are as follows: Job 877 Job 878 Job 879 Job 880 Direct materials $14,510 $6,040 $3,480 $1,860 Direct labor 15,200 8,000 1,600 2,100 Overhead is applied to production at the rate of 70% of direct labor cost. Job 877 was completed on October 28, and the client was billed at cost plus 50%. All other jobs remained in process. Required: 1. Prepare a brief job-order cost sheet showing the October 1 balances of all four jobs, plus the direct materials and direct labor costs during October. There is no need to calculate applied overhead at this point or to total the costs. 2. Calculate the overhead applied to each job during October. 3. Calculate the balance in Work in Process on October 31. 4. What is the price of Job 877?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
| Job 877 | Job 878 | Job 879 | Job 880 | |
| Direct materials | $14,510 | $6,040 | $3,480 | $1,860 |
| Direct labor | 15,200 | 8,000 | 1,600 | 2,100 |
| Required: | |
| 1. | Prepare a brief job-order cost sheet showing the October 1 balances of all four jobs, plus the direct materials and direct labor costs during October. There is no need to calculate applied overhead at this point or to total the costs. |
| 2. | Calculate the overhead applied to each job during October. |
| 3. | Calculate the balance in Work in Process on October 31. |
| 4. | What is the price of Job 877? |
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