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Accounting for manufacturing
This problem continues the Piedmont Computer Company situation from Chapter 16. Piedmont Computer Company uses a job order costing system in which each batch manufactured is a different job. Piedmont Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $25 per hour. It allocates manufacturing overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs.
At the beginning of 2020, the controller prepared the following budget:
In November 2020, Piedmont Computer Company worked on several jobs. Records for two jobs appear here:
Requirements
- 1. Compute Piedmont Computer Company’s predetermined overhead allocation rate for 2020.
- 2. Compute the total cost of each job.
- 3. Why does Piedmont assign
costs to jobs ?
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