Whitley Construction Company is in the home remodeling business. Whitley has three teams of highly skilled employees, each of whom has multiple skills involving carpentry, painting, and other home remodeling activities. Each team is led by an experienced employee who coordinates the work done on each job. As the needs of different jobs change, some team members may be shifted to other teams for short periods of time. Whitley uses a job costing system to determine job costs and to serve as a basis for bidding and pricing the jobs. Direct materials and direct labor are easily traced to each job using Whitley's cost tracking software. Overhead consists of the purchase and maintenance of construction equipment, some supervisory labor, the cost of bidding for new customers, and administrative costs. Whitley uses an annual overhead rate based on direct labor hours. Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for each of the three jobs are summarized below: Direct Materials Direct Labor Hours 40 Job Harrison $ Barnes Tyler 7,008 13,484 44,514 82 137 Direct Labor Cost $ 15,911 24,258 51,728 Budgeted direct materials cost and direct labor cost for the year are estimated at $535,000 and $770,000, respectively. Direct labor hours are budgeted at 31,000 hours, and total overhead is budgeted at $651,000. Required: 1. Calculate the total cost of each of the three jobs. 2. Suppose that for the entire year, Whitley used 32,300 labor hours and total actual overhead was $674,000. What is the amount of underapplied or overapplied overhead?
Whitley Construction Company is in the home remodeling business. Whitley has three teams of highly skilled employees, each of whom has multiple skills involving carpentry, painting, and other home remodeling activities. Each team is led by an experienced employee who coordinates the work done on each job. As the needs of different jobs change, some team members may be shifted to other teams for short periods of time. Whitley uses a job costing system to determine job costs and to serve as a basis for bidding and pricing the jobs. Direct materials and direct labor are easily traced to each job using Whitley's cost tracking software. Overhead consists of the purchase and maintenance of construction equipment, some supervisory labor, the cost of bidding for new customers, and administrative costs. Whitley uses an annual overhead rate based on direct labor hours. Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for each of the three jobs are summarized below: Direct Materials Direct Labor Hours 40 Job Harrison $ Barnes Tyler 7,008 13,484 44,514 82 137 Direct Labor Cost $ 15,911 24,258 51,728 Budgeted direct materials cost and direct labor cost for the year are estimated at $535,000 and $770,000, respectively. Direct labor hours are budgeted at 31,000 hours, and total overhead is budgeted at $651,000. Required: 1. Calculate the total cost of each of the three jobs. 2. Suppose that for the entire year, Whitley used 32,300 labor hours and total actual overhead was $674,000. What is the amount of underapplied or overapplied overhead?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
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.
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Transcribed Image Text:Whitley Construction Company is in the home remodeling business. Whitley has three teams of highly skilled employees, each of whom has
multiple skills involving carpentry, painting, and other home remodeling activities. Each team is led by an experienced employee who
coordinates the work done on each job. As the needs of different jobs change, some team members may be shifted to other teams for short
periods of time. Whitley uses a job costing system to determine job costs and to serve as a basis for bidding and pricing the jobs. Direct
materials and direct labor are easily traced to each job using Whitley's cost tracking software. Overhead consists of the purchase and
maintenance of construction equipment, some supervisory labor, the cost of bidding for new customers, and administrative costs. Whitley
uses an annual overhead rate based on direct labor hours.
Whitley has recently completed work for three clients: Harrison, Barnes, and Tyler. The cost data for each of the three jobs are summarized
below:
Direct Materials Direct Labor Hours
40
82
137
Job
Harrison $
Barnes
Tyler
7,008
13,484
44,514
Budgeted direct materials cost and direct labor cost for the year are estimated at $535,000 and $770,000, respectively. Direct labor hours
are budgeted at 31,000 hours, and total overhead is budgeted at $651,000.
Direct Labor Cost
$
15,911
24,258
51,728
Required:
1. Calculate the total cost of each of the three jobs.
2. Suppose that for the entire year, Whitley used 32,300 labor hours and total actual overhead was $674,000. What is the amount of
underapplied or overapplied overhead?
Required 1
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Required 2
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