Ch05HWSolutions_E1thru6

Ch05HWSolutions_E1thru6 - CHAPTER 5 PRODUCT AND SER- VICE...

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Unformatted text preview: CHAPTER 5 PRODUCT AND SER- VICE COSTING:JOB- ORDER SYSTEM EXERCISES 51 1. Rainking Company should use job-order costing because each installation is unique and made to order. Materials may differ from job to job, as may direct labor. 2. Predetermined overhead rate = $65,000/5,000 = $13 per direct labor hour Wage rate = $75,000/5,000 = $15 per direct labor hour Direct materials.................................... $3,500 Direct labor ($15 50)......................... 750 Overhead ($13 50)............................ 650 Total cost...................................... $ 4,900 3. The company cannot use an actual cost system; it needs to know the cost of each installation as it is completed. Since overhead is incurred unevenly throughout the year, and certain overhead bills arrive after the need for unit costs occur, overhead must be applied to production using a predetermined rate. 52 1. Waterpro should use a process-costing system because each watering sys- tem is like every other so the cost of direct materials, direct labor, and over- head stays constant from job to job. 2. If Waterpro uses an actual costing system, the average amounts for actual direct materials, actual direct labor, and actual overhead must be calculated...
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This note was uploaded on 02/08/2010 for the course ACTG 3000 taught by Professor C during the Spring '10 term at Oregon State.

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Ch05HWSolutions_E1thru6 - CHAPTER 5 PRODUCT AND SER- VICE...

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