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Peaton Computer Company uses a job order costing system in which each batch manufactured is a different job. Peaton Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $2 overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2024, the controller prepared the following budget: (Click the icon to view the budget.) In November 2024, Peaton Computer Company worked on several jobs. Records for two jobs appear here: (Click the icon to view the records for the two jobs.) Read the requirements. Data table Requirement 1. Compute Peaton Computer Company's predetermined overhead (OH) allocation rate for 2024. Estimated OH costs Estimated direct labor hours 610000 1220000 Requirement 2. Compute the total cost of each job. Job 721 Job 722 Direct materials 20000 1900 Direct labor 17710 2760 Overhead allocation rate 8855.00 1380 46565 6040 Total cost Requirement 3. Why does Peaton assign costs to jobs? Predetermined OH allocation rate 50 % Manufacturing overhead Direct labor costs $ 610,000 $ 1,220,000 Print Done Job 721 Job 722 Direct labor hours Direct materials 770 hours $ 20,600 $ 120 hours 1,900 Print Done Peaton Computer Company assigns costs to jobs to help the company set sales prices that cover all costs and contribute to profit. Assigning costs to individual jobs also can help Peaton control costs.

Peaton Computer Company uses a job order costing system in which each batch manufactured is a different job. Peaton Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $2 overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2024, the controller prepared the following budget: (Click the icon to view the budget.) In November 2024, Peaton Computer Company worked on several jobs. Records for two jobs appear here: (Click the icon to view the records for the two jobs.) Read the requirements. Data table Requirement 1. Compute Peaton Computer Company's predetermined overhead (OH) allocation rate for 2024. Estimated OH costs Estimated direct labor hours 610000 1220000 Requirement 2. Compute the total cost of each job. Job 721 Job 722 Direct materials 20000 1900 Direct labor 17710 2760 Overhead allocation rate 8855.00 1380 46565 6040 Total cost Requirement 3. Why does Peaton assign costs to jobs? Predetermined OH allocation rate 50 % Manufacturing overhead Direct labor costs $ 610,000 $ 1,220,000 Print Done Job 721 Job 722 Direct labor hours Direct materials 770 hours $ 20,600 $ 120 hours 1,900 Print Done Peaton Computer Company assigns costs to jobs to help the company set sales prices that cover all costs and contribute to profit. Assigning costs to individual jobs also can help Peaton control costs.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
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Peaton Computer Company uses a job order costing system in which each batch manufactured is a different job. Peaton Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $2 overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2024, the controller prepared the following budget: (Click the icon to view the budget.) In November 2024, Peaton Computer Company worked on several jobs. Records for two jobs appear here: (Click the icon to view the records for the two jobs.) Read the requirements. Data table Requirement 1. Compute Peaton Computer Company's predetermined overhead (OH) allocation rate for 2024. Estimated OH costs Estimated direct labor hours 610000 1220000 Requirement 2. Compute the total cost of each job. Job 721 Job 722 Direct materials 20000 1900 Direct labor 17710 2760 Overhead allocation rate 8855.00 1380 46565 6040 Total cost Requirement 3. Why does Peaton assign costs to jobs? Predetermined OH allocation rate 50 % Manufacturing overhead Direct labor costs $ 610,000 $ 1,220,000 Print Done Job 721 Job 722 Direct labor hours Direct materials 770 hours $ 20,600 $ 120 hours 1,900 Print Done Peaton Computer Company assigns costs to jobs to help the company set sales prices that cover all costs and contribute to profit. Assigning costs to individual jobs also can help Peaton control costs.
Transcribed Image Text:Peaton Computer Company uses a job order costing system in which each batch manufactured is a different job. Peaton Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $2 overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2024, the controller prepared the following budget: (Click the icon to view the budget.) In November 2024, Peaton Computer Company worked on several jobs. Records for two jobs appear here: (Click the icon to view the records for the two jobs.) Read the requirements. Data table Requirement 1. Compute Peaton Computer Company's predetermined overhead (OH) allocation rate for 2024. Estimated OH costs Estimated direct labor hours 610000 1220000 Requirement 2. Compute the total cost of each job. Job 721 Job 722 Direct materials 20000 1900 Direct labor 17710 2760 Overhead allocation rate 8855.00 1380 46565 6040 Total cost Requirement 3. Why does Peaton assign costs to jobs? Predetermined OH allocation rate 50 % Manufacturing overhead Direct labor costs $ 610,000 $ 1,220,000 Print Done Job 721 Job 722 Direct labor hours Direct materials 770 hours $ 20,600 $ 120 hours 1,900 Print Done Peaton Computer Company assigns costs to jobs to help the company set sales prices that cover all costs and contribute to profit. Assigning costs to individual jobs also can help Peaton control costs.
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