Asked by Zahra Topaz on Apr 26, 2024
Verified
Grant Marwick and Associates a CPA firm uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November. Rondelli ‾ Preston ‾ Lopez ‾ Direct materials $900$600$300 Auditor labor costs $5,900$6,600$3,700 Auditor hours 668845\begin{array}{lrrr} & \underline{\text { Rondelli }} & \underline{\text { Preston }} & \underline{\text { Lopez }}\\\text { Direct materials }& \$ 900 & \$ 600 & \$ 300 \\\text { Auditor labor costs } & \$ 5,900 & \$ 6,600 & \$ 3,700 \\\text { Auditor hours } &66&88&45\end{array} Direct materials Auditor labor costs Auditor hours Rondelli $900$5,90066 Preston $600$6,60088 Lopez $300$3,70045
Overhead costs are applied to jobs on the basis of auditor hours and the predetermined overhead rate is $50 per auditor hour. The Rondelli job is the only incomplete job at the end of November. Actual overhead for the month was $10500.
Instructions
(a) Determine the cost of each job.
(b) Indicate the balance of the Work in Process account at the end of November.
(c) Calculate the ending balance of the Manufacturing Overhead account for November.
Auditor Hours
The total time spent by auditors reviewing and verifying the financial statements and records of an entity.
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead costs to products, based on a predetermined formula.
Direct Materials
The raw materials that are directly incorporated into a finished product and can be directly attributed to the product.
- Generate financial records for activities involving raw materials, labor, overhead contributions, and the process of sales.
- Scrutinize and explicate data pertaining to manufacturing costs to tackle unidentified variables using the principles of job order costing.
Verified Answer
Rondelli Preston Lopez Direct materials $900$600$300 Auditor labor costs 5,9006,6003,700 Applied overhead 3,300‾4,400‾2,250 Total cost $10,100‾$11,600‾‾$6,250‾‾\begin{array} { l r r r } & \text { Rondelli } & \text { Preston } & \text { Lopez } \\ \text { Direct materials } & \$ 900 & \$ 600 & \$ 300 \\ \text { Auditor labor costs } & 5,900 & 6,600 & 3,700 \\ \text { Applied overhead } & \underline { 3,300 } & \underline { 4,400 } & 2,250 \\ \quad \text { Total cost } & \underline { \$ 10,100 } & \underline { \underline { \$ 11,600 } } & \underline { \underline { \$ 6,250 } } \end{array} Direct materials Auditor labor costs Applied overhead Total cost Rondelli $9005,9003,300$10,100 Preston $6006,6004,400$11,600 Lopez $3003,7002,250$6,250
(b) The Rondelli job is the only incomplete job, therefore, $10,100\$ 10,100$10,100
(c)
Actual overhead $10,500 (DR) Applied overhead 9,950 (CR) Balance $550 (DR) \begin{array}{ll}\text { Actual overhead } & \$ 10,500 \text { (DR) } \\\text { Applied overhead } & 9,950 \text { (CR) } \\\text { Balance } & \$ 550 \text { (DR) }\end{array} Actual overhead Applied overhead Balance $10,500 (DR) 9,950 (CR) $550 (DR)
Learning Objectives
- Generate financial records for activities involving raw materials, labor, overhead contributions, and the process of sales.
- Scrutinize and explicate data pertaining to manufacturing costs to tackle unidentified variables using the principles of job order costing.
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