Horngren's Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (12th Edition)
12th Edition
ISBN: 9780134642949
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 19, Problem P19.39BPGB
Using job order costing in a service company
Learning Objective 6
2. Tasty Co-op $312,500
Skylark Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each client is a different job. Skylark Design assigns direct labor, licensing costs, and travel costs directly to each job. It allocates indirect
At the beginning of 2018, managing partner Judi Jacquin prepared the following budget estimates:
| Direct labor hours (professionals) | 8,000 hours |
| Direct labor costs (professionals) | $2,000,000 |
| Support staff salaries | 866,000 |
| Computer leases | 49,000 |
| Office supplies | 24,000 |
| Office rent | 61,000 |
In November 2018, Skylark Design served several clients. Records for two clients appear here:
| Tasty Co-op | Maynard Chocolates | |
| Direct labor hours | 800 hours | 300 hours |
| Software licensing costs | $1,500 | $500 |
| Travel costs | 11,000 | 0 |
Requirements
- Compute Skylark Design's direct labor rate and its predetermined overhead allocation rate for 2018.
- Compute the total cost of each job.
- If Judi wants to earn profits equal to 50% of service revenue, what fee should she charge each of these two clients?
- Why does Skylark Design assign costs to jobs?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Using job order costing in a service company
Bluebird Design, Inc. is a Web site design and consulting firm. The firm uses a job order costing system in which each client is a different job. Bluebird Design assigns direct labor, licensing costs, and travel costs directly to each job. It allocates indirect costs to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs.
At the beginning of 2018, managing partner Sally Simone prepared the following budget estimates:
In November 2018, Bluebird Design served several clients. Records for two clients appear here:
Requirements
Compute Bluebird Designs direct labor rate and its predetermined overhead allocation rate for 2018.
Compute the total cost of each job.
If Simone wants to earn profits equal to 50% of service revenue, what fee should she charge each of these two clients?
Why does Bluebird Design assign costs to jobs?
Job Order Cost Accounting for a Service Company
I ONLY NEED PART D
The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 60% of media purchases.
On August 1, the four advertising projects had the following accumulated costs:
August 1 Balances
Vault Bank
$72,500
Take Off Airlines
21,800
Sleepy Tired Hotels
50,800
Tastee Beverages
31,200
Total
$176,300
During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:…
Please do not give solution in image format thanku
Chapter 19 Solutions
Horngren's Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (12th Edition)
Ch. 19 - Prob. 1QCCh. 19 - When a manufacturing company uses direct...Ch. 19 - When a manufacturing company uses indirect...Ch. 19 - When a manufacturing company uses direct labor, it...Ch. 19 - What is Gell's predetermined overhead allocation...Ch. 19 - What is Gell's actual manufacturing overhead cost?...Ch. 19 - How much manufacturing overhead would Gell...Ch. 19 - What entry would Gell make to adjust the...Ch. 19 - A manufacturing company completed work on a job....Ch. 19 - Prob. 10QC
Ch. 19 - Why do managers need to know the cost of their...Ch. 19 - What types of companies use job order costing...Ch. 19 - What types of companies use process costing...Ch. 19 - What is the purpose of a job cost record?Ch. 19 - Explain the difference between cost of goods...Ch. 19 - A job was started on May 15, completed on June 27,...Ch. 19 - Give the journal entry for raw materials purchased...Ch. 19 - What is the purpose of the raw materials...Ch. 19 - How does the use of direct and indirect materials...Ch. 19 - Give the journal entry for direct and indirect...Ch. 19 - Give five examples of manufacturing overhead...Ch. 19 - What is the predetermined overhead allocation...Ch. 19 - What is an allocation base? Give some examples.Ch. 19 - How is manufacturing overhead allocated to jobs?Ch. 19 - A completed job cost record shows the unit cost of...Ch. 19 - Explain the journal entry for the allocation of...Ch. 19 - Give the journal entry for the completion of a...Ch. 19 - Why does the sale of a completed job require two...Ch. 19 - Prob. 19RQCh. 19 - If a company incurred $5,250 in actual overhead...Ch. 19 - Refer to the previous question. Give the journal...Ch. 19 - Explain the terms accumulate, assign, allocate,...Ch. 19 - Why would the manager of a service company need to...Ch. 19 - How is the predetermined overhead allocation rate...Ch. 19 - Distinguishing between job order costing and...Ch. 19 - Accounting for materials Back Country manufactures...Ch. 19 - Accounting for materials Learning Objective 2...Ch. 19 - Accounting for labor Learning Objective 2...Ch. 19 - Accounting for overhead Learning Objective 3 Oak...Ch. 19 - Allocating overhead Learning Objective 3 Job 303...Ch. 19 - Calculating predetermined overhead allocation...Ch. 19 - Completing and selling products Learning Objective...Ch. 19 - Comparing actual to allocated overhead Learning...Ch. 19 - Calculating under/overallocated overhead Learning...Ch. 19 - Prob. S19.11SECh. 19 - Prob. S19.12SECh. 19 - Prob. S19.13SECh. 19 - Prob. S19.14SECh. 19 - Distinguishing between job order costing and...Ch. 19 - Defining terminology Learning Objectives 1,2 Match...Ch. 19 - E19-17 Accounting for job costs
Learning Objective...Ch. 19 - E19-18 Recording materials and labor...Ch. 19 - Prob. E19.19ECh. 19 - Allocating and adjusting manufacturing overhead...Ch. 19 - Prob. E19.21ECh. 19 - Prob. E19.22ECh. 19 - Prob. E19.23ECh. 19 - Preparing job order costing journal entries...Ch. 19 - Prob. E19.25ECh. 19 - E19-26 Determining missing amounts
Learning...Ch. 19 - Prob. E19.27ECh. 19 - Prob. P19.28APGACh. 19 - Prob. P19.29APGACh. 19 - Prob. P19.30APGACh. 19 - Prob. P19.31APGACh. 19 - Prob. P19.32APGACh. 19 - Prob. P19.33APGACh. 19 - Prob. P19.34BPGBCh. 19 - Prob. P19.35BPGBCh. 19 - Prob. P19.36BPGBCh. 19 - Prob. P19.37BPGBCh. 19 - Prob. P19.38BPGBCh. 19 - Using job order costing in a service company...Ch. 19 - Using Excel to calculate a predetermined overhead...Ch. 19 - P19-41 Accounting for manufacturing overhead
This...Ch. 19 - Prob. 19.1TIATCCh. 19 - Prob. 19.1DCCh. 19 - Prob. 19.1FC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Cost Accounting Please answer in 12 hours, thank youarrow_forwardto the balance in Finished Goods? What would happen to the balance of Cost of Goods pay he Job by JU 30? What would happen Sold? Cornerstone Exercise 5.3 Job Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost Driver Amount of Driver Materials handling Engineering Other overhead $ 72,000 165,000 280,000 Number of moves 3,000 10,000 Number of change orders Direct labor hours 50,000 Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44 Job 13-45 Job 13-46 $ 2,300 $12,700 $32,000 %24 $9,800 $2,400 (continued) $ Beginning balance Direct materials $20,300 $ 6,500 $19,800 $ 8,900 $20,000 $18,000 Direct labor costarrow_forwardlike to set Microsoft Edge as your default browser? Set as default CD Job-order Costing System Activities Activity 1: The following information is for GANA Company that uses the job-order costing technique for determining cost of sales. The following data is obtained from its records for the year ended 31 st December 2020. Particular BD. Direct materials 8000 Direct labour 5000 Factory overheads 12500 Administrative overheads 3500 Selling and Distribution overheads 4500 Profit on cost 10% You are required to: 1- Prepare a Job cost sheet indicating prime cost, work cost, production cost, cost of sales and sales value.arrow_forward
- Alvarez Manufacturing Inc. is a job shop. The management of Alvarez Manufacturing Inc. uses the cost information from the job sheets to assess cost performance. Information on the total cost, product type, and quantity of items produced is as follows: a. Develop a graph for each product (three graphs), with Job Number (in date order) on the horizontal axis and Unit Cost on the vertical axis. Use this information to determine Alvarez Manufacturing Inc.s cost performance over time for the three products. b. What additional information would you require in order to investigate Alvarez Manufacturing Inc.s cost performance more precisely?arrow_forwardJob order cost accounting for a service company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 65% of media purchases. On August 1, the four advertising projects had the following accumulated costs: During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account. Journalize the summary entry to record each of the following for the month: A. Direct labor costs B. Media purchases C. Overhead applied D. Completion of Vault Bank and Take Off Airlines campaignsarrow_forwardB AliExpress... https://ww... Ch. 15 IT (Interactive Tutorial) Question 5 of 13 Current Attempt in Progress Direct materials Direct labor Job 201 Blossom Company is working on two job orders. The job cost sheets show the following. $7,000 3,800 https://ww... Work in Process Inventory Work in Process Inventory Account Titles and Explanation (To assign materials to jobs) (To assign labor to jobs) Job 202 $8,800 (6284) Ho... 7,800 Start and... Prepare the two summary entries to record the assignment of costs to Work in Process from the data on the job cost sheets. (Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.) DZL Homepag... Debit ACCT 210... Credit W Ch. 15 IT (... -/0.77 : WP Question... DEL Homepag... Question List Question 1 Accounting Multistep Question 2 Accounting Multistep Question 3 Accounting Dropdown Question 4 Accounting Multistep Viewing Question 5 Accounting Dropdown Question 6…arrow_forward
- please explain in steps, thanksarrow_forwardPratice Problem 3 A company's individual job sheets show these costs for Jobs 298, 299, and 300. Direct material is RO 2,228, RO 23,945, and RO 4,231 respectively. Direct labor is RO 2,391, RO 23,492, and RO 3,413, respectively. Overhead is applied at 1.75 times the direct labor cost. Use the data on the cost sheets to perform these tasks: You are required to : Prepare an entry to record the assignment of direct material to work in process. Prepare an entry to record the assignment of direct labor to work in process. Prepare an entry to record the assignment of manufacturing overhead to work in process. ●arrow_forwardPart 2: Job Order Costing Mr. Suncat is trying to determine if he should use a job order costing system or an activity-based costing system to better determine the cost of each of his products. He has provided you with the following information and has requested that you help him by answering these questions/calculating these amounts. Basic Multi-Layer Custom Direct Material Costs per wedding cake type $20 $35 $50 Direct Labor Hours per wedding cake type 3 hours 5 hours 7 hours Number of cakes expected to be produced by wedding cake type 1500 1700 1000 Direct Labor Costs per hour per wedding cake type $50/hour $50/hour $50/hour Total estimated manufacturing overhead cost is $150,000. Using the information given above, compute the predetermined manufacturing overhead rate based on total direct labor hours for Suncat Cake Shop. Show all calculations and clearly label your answer.arrow_forward
- E18-17 Comparing job order costing versus process costing Learning Objective 1 For each of the following products or services, indicate if the cost would most likely be determined using a job order costing system or a process costing system. a. Soft drinks b. Automobile repairs c. Customized furniture d. Aluminum foil e. Lawn chairs f. Chocolate candy bars g. Hospital surgery h. Pencilsarrow_forwardHelp answer this plsarrow_forwardPratice Problem 2: A company's individual job sheets show these costs: A chart showing costs for Jobs 131, 132, and 133. Direct materials is RO 4585, RO 8723, and RO 1575 respectively. Direct labor is RO2385, RO 2498, and RO 2874, respectively. Overhead is applied at 1.25 times the direct labor cost. You are required to : Prepare an entry to record the assignment of direct materials to work in process. Prepare an entry to record the assignment of direct labor to work in process. Prepare an entry to record the assignment of manufacturing overhead to work in process.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY