3.16 may%2013%20examples

# 3.16 may%2013%20examples - ACIS 222 Job-order Costing...

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ACIS 222 Job-order Costing Example Problems EXAMPLE 1 Ben Webster, owner of Webster Landscaping, develops landscape plans and puts in plant material for his clients. He just signed a contract with the developer of a new subdivision to landscape the five model houses in the subdivision. This will involve laying sod and planting trees, shrubs, and flowers. Ben figures that the job will require materials costing \$950 and 60 direct labour hours at \$6 per hour. Overhead is applied on the basis of direct labour hours at a rate of \$15 per hour. REQUIRED: (a) What is the total cost of the job? the unit cost? (b) If Ben charges a price that is 40 percent above cost, what price is charged to the developer for the entire job? EXAMPLE 2 Reynolds Printing Company specialises in wedding announcements. Reynolds uses an actual job- order cost system. An actual overhead rate is calculated at the end of each month using actual direct labour hours and overhead for the month. Once the actual cost of a job is determined, the customer is billed at actual cost plus 50 percent. During April, Mrs. Lucky, a good friend of owner Jane Reynolds, ordered three sets of wedding announcements to be delivered May 10, June 10, and July 10, respectively. Reynolds scheduled production for each order on May 7, June 7, and July 7. The orders were assigned job numbers 115, 116, and 117, respectively. Reynolds assured Mrs. Lucky that she would attend each of her daughters' weddings. Out of

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## This note was uploaded on 12/23/2009 for the course BCOM ACIS 222 taught by Professor Neilcrombie during the Spring '09 term at Canterbury.

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3.16 may%2013%20examples - ACIS 222 Job-order Costing...

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