Omicronie Inc., provides project management services in the construction industry for a variety of clients. Each job is uniquely different and the Lynn Deberghie, the company’s accountant decided to use job costing for the allocation of costs on the current jobs. She will be using construction-labour hours as the basis for overhead allocation. In December 2021, she estimated the following amounts for 2022: Direct Materials $15,650,000 Construction Labour $11,200,000 Overhead $9,800,000 Construction Labour-Hours 600,000 The following results for the first quarter of 2022 for the following jobs that were started and completed in that same period. Library Dental Office Medical Building Direct Materials $924,000 $1,134,600 $1,525,000 Construction Labour-Hours 76,400 47,200 19,500 Rounding all answers to 2 decimal places Calculate the predetermined overhead allocation rate for 2022 and apply overhead to the three (3) jobs. Calculate the cost of each job.
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.
Omicronie Inc., provides project management services in the construction industry for a variety of clients. Each job is uniquely different and the Lynn Deberghie, the company’s accountant decided to use
|
Direct Materials |
$15,650,000 |
|
Construction Labour |
$11,200,000 |
|
Overhead |
$9,800,000 |
|
Construction Labour-Hours |
600,000 |
The following results for the first quarter of 2022 for the following jobs that were started and completed in that same period.
|
|
Library |
Dental Office |
Medical Building |
|
Direct Materials |
$924,000 |
$1,134,600 |
$1,525,000 |
|
Construction Labour-Hours |
76,400 |
47,200 |
19,500 |
Rounding all answers to 2 decimal places
- Calculate the predetermined overhead allocation rate for 2022 and apply overhead to the three (3) jobs.
- Calculate the cost of each job.
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