Overtime Allocation Albert Machine Tool Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Job 401 Job 402 Di rect materials $28,000 $37,000 Di rect labor: Regular 18,000 23,000 Overtime premium 6,000 Other factory costs for the month totaled $16,800. Factory overhead costs are allocated one- third to Job 401 and two-thirds to Job 402. a. Describe two alternative methods for assigning the overtime premium cost to Jobs 401 and 402 and explain how the appropriate method would be determined. b. Compute the cost of Job 401 and Job 402 under each of the two methods described in part a.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Overtime Allocation
Albert Machine Tool Company produces tools on a job order basis. During May, two jobs were
completed, and the following costs were incurred:
Job 401
Job 402
Direct materials
$28,000
$37,000
Direct labor: Regular
18,000
23,000
Overtime premium
6,000
Other factory costs for the month totaled $16,800. Factory overhead costs are allocated one-
third to Job 401 and two-thirds to Job 402.
a. Describe two alternative methods for assigning the overtime premium cost to Jobs 401 and
402 and explain how the appropriate method would be determined.
b. Compute the cost of Job 401 and Job 402 under each of the two methods described in part a.
Transcribed Image Text:Overtime Allocation Albert Machine Tool Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Job 401 Job 402 Direct materials $28,000 $37,000 Direct labor: Regular 18,000 23,000 Overtime premium 6,000 Other factory costs for the month totaled $16,800. Factory overhead costs are allocated one- third to Job 401 and two-thirds to Job 402. a. Describe two alternative methods for assigning the overtime premium cost to Jobs 401 and 402 and explain how the appropriate method would be determined. b. Compute the cost of Job 401 and Job 402 under each of the two methods described in part a.
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