CPAPrepChapter4 - CHAPTER 4 JOB COSTING 4-7 The main...

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CHAPTER 4 JOB COSTING 4-7 The main concern with the source documents of job cost records is the accuracy of the records. Problems occurring in this area include incorrect recording of quantity or dollar amounts, materials recorded on one job being “borrowed” and used on other jobs, and erroneous job numbers being assigned to materials or labor inputs. 4-22 (15–20 min.) Service industry, time period used to compute indirect cost rates. 1. Jan–March April–June July–Sept Oct–Dec Total Direct labor costs $400,000 $280,000 $250,000 $270,000 $1,200,000 Variable overhead costs as a percentage of direct labor costs 90 % 60 % 60 % 60 % Variable overhead costs (Percentage h direct labor costs) $360,000 $168,000 $150,000 $162,000 $ 840,000 Fixed overhead costs 300,000 300,000 300,000 300,000 1,200,000 Total overhead costs $660,000 $468,000 $450,000 $462,000 $2,040,000 Total overhead costs as a percentage of direct labor costs 165% 167% 180% 171% 170% Budgeted Overhead Rate Used Job 332 Jan–March Rate July–Sept Rate Average Yearly Rate Direct materials $10,000 $10,000 $10,000 Direct labor costs 6,000 6,000 6,000 Overhead allocated (variable + fixed) (165%; 180%; 170% of $6,000) 9,900 10,800 10,200 Full cost of Job 332 $25,900 $26,800 $26,200 (a) The full cost of Job 332, using the budgeted overhead rate of 165% for January– March, is $25,900. (b) The full cost of Job 332, using the budgeted overhead rate of 180% for July– September, is $26,800. (c) The full cost of Job 332, using the annual budgeted overhead rate of 170%, is $26,200. 2. Budgeted fixed overhead rate based on annual fixed overhead costs and annual direct labor costs = $1,200,000 h $1,200,000 = 100% 1
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Budgeted Variable Overhead Rate Used Job 332 January–March rate July–Sept rate Direct materials
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This note was uploaded on 08/11/2009 for the course ACCT 612 taught by Professor Jamesswanson during the Spring '09 term at Univ. of Massachusetts Med. School.

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CPAPrepChapter4 - CHAPTER 4 JOB COSTING 4-7 The main...

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