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O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. only bulds to order (each unit is built to customer specifications). O'Leary uses a normal job costing system. Direct labor at O'Leary Is pald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows. Year 1 Year 2 Direct labor-haurs worked 68, 800 55,800 Manufacturing overhead costs incurred Indirect labor Employee benefits Supplies Paver $2,832, 000 1,032,eee 688, 00e 645,000 141,600 781,470 2,036, 500 787,430 $2, 232, e00 837,000 558, e00 540, eee 141, 600 661,65e 2,036, 500 se5, 250 Heat and light Supervision Depreciation Property taxes and insurance

O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. only bulds to order (each unit is built to customer specifications). O'Leary uses a normal job costing system. Direct labor at O'Leary Is pald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows. Year 1 Year 2 Direct labor-haurs worked 68, 800 55,800 Manufacturing overhead costs incurred Indirect labor Employee benefits Supplies Paver $2,832, 000 1,032,eee 688, 00e 645,000 141,600 781,470 2,036, 500 787,430 $2, 232, e00 837,000 558, e00 540, eee 141, 600 661,65e 2,036, 500 se5, 250 Heat and light Supervision Depreciation Property taxes and insurance

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only bullds to order (each unit is bullt to customer specifications). O'Leary uses a normal Job costing system. Direct labor at O'Leary Is pald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead Is assigned to Jobs by a predetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years (adjusted for price-level changes usling current prices and wage rates) as follows. Year 1 Year 2 Direct labor-hours worked 68, 800 55,800 Manufacturing overhead costs incurred Indirect labor $2,832, 000 1,832, 880 688, 000 645, 000 141, 600 781,478 2,036, 5ee 787,430 $2, 232, 800 837,800 558, 000 548, 800 141,600 661,650 2,836, 500 805, 250 $7,812, 800 Employee benefits Supplies Power Heat and light Supervision Depreciation Property taxes and insurance Total manufacturing overhead costs $8,944, 000 At the beginning of year 3, O'Leary has two Jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27. year 2. It is scheduled to ship on January 7, year 3. Job MC-275 Is still n progress. For the purpose of computing the predetermined overhead rate. O'Leary uses the prevlous year's actual overhead rate. Data on direct materlal costs and direct labor- hours for these Jobs In year 2 follow. Job MC-270 $271,880 2,590 hours Job MC-275 Direct naterial costs Direct labor-hours $496,800 3,290 hours During year 3, O'Leary Incurred the following direct materlal costs and direct labor-hours for all jobs worked in year 3. Including the completion of Job MC-275. Direct naterial costs $11,841,800 75,800 $ 9,552, 808 Direct labor-hours Actual manufacturing overhead At the end of year 3, there were four Jobs that had not yet shipped. Data on these Jobs follow. MC-389 MC-390 MC-397 MC-399 $68,8e0 2,790 hours Finished Direct materials $45,000 1,758 hours Finished $165, 300 6,190 hours In progress $30,780 1,390 hours In progress Direct labor-hours Job statu
Transcribed Image Text:O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only bullds to order (each unit is bullt to customer specifications). O'Leary uses a normal Job costing system. Direct labor at O'Leary Is pald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead Is assigned to Jobs by a predetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years (adjusted for price-level changes usling current prices and wage rates) as follows. Year 1 Year 2 Direct labor-hours worked 68, 800 55,800 Manufacturing overhead costs incurred Indirect labor $2,832, 000 1,832, 880 688, 000 645, 000 141, 600 781,478 2,036, 5ee 787,430 $2, 232, 800 837,800 558, 000 548, 800 141,600 661,650 2,836, 500 805, 250 $7,812, 800 Employee benefits Supplies Power Heat and light Supervision Depreciation Property taxes and insurance Total manufacturing overhead costs $8,944, 000 At the beginning of year 3, O'Leary has two Jobs, which have not yet been delivered to customers. Job MC-270 was completed on December 27. year 2. It is scheduled to ship on January 7, year 3. Job MC-275 Is still n progress. For the purpose of computing the predetermined overhead rate. O'Leary uses the prevlous year's actual overhead rate. Data on direct materlal costs and direct labor- hours for these Jobs In year 2 follow. Job MC-270 $271,880 2,590 hours Job MC-275 Direct naterial costs Direct labor-hours $496,800 3,290 hours During year 3, O'Leary Incurred the following direct materlal costs and direct labor-hours for all jobs worked in year 3. Including the completion of Job MC-275. Direct naterial costs $11,841,800 75,800 $ 9,552, 808 Direct labor-hours Actual manufacturing overhead At the end of year 3, there were four Jobs that had not yet shipped. Data on these Jobs follow. MC-389 MC-390 MC-397 MC-399 $68,8e0 2,790 hours Finished Direct materials $45,000 1,758 hours Finished $165, 300 6,190 hours In progress $30,780 1,390 hours In progress Direct labor-hours Job statu
Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E A customer has asked O'Leary to bid on a job to be completed in year 4. O'Leary estimates that the job will require about $93,400 in direct materials and 5,090 direct labor-hours. Because of the economy, O'Leary expects demand for its services to be low in year 4, and the CEO wants to bid aggressively, but does not want to lose any money on the project. O'Leary estimates that there would be virtually no sales or administrative costs associated with this job. What is the minimum amount O'Leary can bid on the job and still not incur a loss? Show less A Minimum amount < Required D Required E >
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E A customer has asked O'Leary to bid on a job to be completed in year 4. O'Leary estimates that the job will require about $93,400 in direct materials and 5,090 direct labor-hours. Because of the economy, O'Leary expects demand for its services to be low in year 4, and the CEO wants to bid aggressively, but does not want to lose any money on the project. O'Leary estimates that there would be virtually no sales or administrative costs associated with this job. What is the minimum amount O'Leary can bid on the job and still not incur a loss? Show less A Minimum amount < Required D Required E >
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