Problem 1. The Evergreen Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Job 402 Direct materials Job 401 P 28,000 18,000 P 37,000 Direct labor regular 23,000 overtime premium 6,000 Other factory costs for the month totaled P 16,800. Factory overhead costs are allocated one- third to Job 401 and two-thirds to Job 402. Required: ► a) Describe two alternative methods of recording the overtime premium and explain how the appropriate method affect the cost of each job. ► b) Compute the cost of Job 401 and Job 402 under each of the two methods.
Problem 1. The Evergreen Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Job 402 Direct materials Job 401 P 28,000 18,000 P 37,000 Direct labor regular 23,000 overtime premium 6,000 Other factory costs for the month totaled P 16,800. Factory overhead costs are allocated one- third to Job 401 and two-thirds to Job 402. Required: ► a) Describe two alternative methods of recording the overtime premium and explain how the appropriate method affect the cost of each job. ► b) Compute the cost of Job 401 and Job 402 under each of the two methods.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 1. The Evergreen Company produces tools on a job order basis. During May, two jobs
were completed, and the following costs were incurred:
Job 402
Direct materials
Direct labor
Job 401
P 28,000
18,000
P 37,000
23,000
regular
overtime premium
6,000
Other factory costs for the month totaled P 16,800. Factory overhead costs are allocated one-
third to Job 401 and two-thirds to Job 402.
Required:
a) Describe two alternative methods of recording the overtime premium and explain how the
appropriate method affect the cost of each job.
▸ b) Compute the cost of Job 401 and Job 402 under each of the two methods.
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