Overtime AllocationArlin Fabrication Company produces tools on a job order basis.During May, two jobs were completed, and the following costswere incurred:Job 401 Job 402Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,000 $37,000Direct labor: Regular . . . . . . . . . . . . . . . . . . . . . . . 18,000 23,000Overtime premium . . . . . . . . . . . . . . . . . . . . . . . – 6,000Other factory costs for the month totaled $16,800. Factory overheadcosts are allocated one-third to Job 401 and two-thirds toJob 402.a. Describe two alternative methods for assigning the overtimepremium cost to Jobs 401 and 402 and explain how the appropriatemethod would be determined. b. Compute the cost of Jobs 401 and 402 under each of the twomethods described in part a.
Overtime AllocationArlin Fabrication Company produces tools on a job order basis.During May, two jobs were completed, and the following costswere incurred:Job 401 Job 402Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,000 $37,000Direct labor: Regular . . . . . . . . . . . . . . . . . . . . . . . 18,000 23,000Overtime premium . . . . . . . . . . . . . . . . . . . . . . . – 6,000Other factory costs for the month totaled $16,800. Factory overheadcosts are allocated one-third to Job 401 and two-thirds toJob 402.a. Describe two alternative methods for assigning the overtimepremium cost to Jobs 401 and 402 and explain how the appropriatemethod would be determined. b. Compute the cost of Jobs 401 and 402 under each of the twomethods described in part a.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| Overtime Allocation Arlin Fabrication 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 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 Jobs 401 and 402 under each of the two methods described in part a. |
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