Number of pipes produced for job j1 2000 cost per

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Number of pipes produced for Job J1 2,000 Cost per pipe ($625,000 ÷ 2,000) $312.50 3. Finished Goods Control 625,000 Work-in-Process Control 625,000 4. Douglas Corporation began March 2009 with no work-in-process inventory. During March, it started and finished J1. It also started J2, which is still in work-in-process inventory at the end of March. J2’s manufacturing costs up to this point, $556,250, remain as a debit balance in the Work-in-Process Inventory account at the end of March 2009.
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4-21 4-28 (20 30 min.) Job costing; actual, normal, and variation from normal costing. 1. Actual direct cost rate for professional labor = $58 per professional labor-hour Actual indirect cost rate = $744,000 15,500 hours = $48 per professional labor-hour Budgeted direct cost rate for professional labor = $960,000 16,000 hours = $60 per professional labor-hour Budgeted indirect cost rate = $720,000 16,000 hours = $45 per professional labor-hour (a) Actual Costing (b) Normal Costing (c) Variation of Normal Costing Direct-Cost Rate $58 (Actual rate) $58 (Actual rate) $60 (Budgeted rate) Indirect-Cost Rate $48 (Actual rate) $45 (Budgeted rate) $45 (Budgeted rate) 2. (a) Actual Costing (b) Normal Costing (c) Variation of Normal Costing Direct Costs Indirect Costs Total Job Costs $58 × 120 = $ 6,960 48 × 120 = 5,760 $12,720 $58 × 120 = $ 6,960 45 × 120 = 5,400 $12,360 $60 × 120 = $ 7,200 45 × 120 = 5,400 $12,600 All three costing systems use the actual professional labor time of 120 hours. The budgeted 110 hours for the Pierre Enterprises audit job is not used in job costing. However, Chirac may have used the 110 hour number in bidding for the audit. The actual costing figure of $12,720 exceeds the normal costing figure of $12,360 because the actual indirect-cost rate ($48) exceeds the budgeted indirect-cost rate ($45). The normal costing figure of $12,360 is less than the variation of normal costing (based on budgeted rates for direct costs) figure of $12,600, because the actual direct-cost rate ($58) is less than the budgeted direct-cost rate ($60).
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4-22 Although not required, the following overview diagram summarizes Chirac’s job-costing system. Audit Support Professional Labor-Hours Indirect Costs Direct Costs INDIRECT COST POOL COST ALLOCATION BASE COST OBJECT: JOB FOR AUDITING PIERRE & CO. DIRECT COST Professional Labor
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4-23 4-29 (30 min.) Job order costing: actual, normal, and variation from normal costing. 1a. Actual costing Direct cost rate = Actual professional labor costs ÷ Actual professional labor-hours = $1,400,000 ÷ 20,000 hours = $70 per professional-hour Indirect cost rate = Actual support costs ÷ Actual professional labor-hours = $2,800,000 ÷ 20,000 hours = $140 per professional-hour 1b. Normal costing Budgeted professional hours = Budgeted hours per lawyer × Number of lawyers = 2,000 × 7 = 14,000 hours Direct cost rate = Actual professional labor costs ÷ Actual professional labor-hours = $1,400,000 ÷ 20,000 hours = $70 per professional-hour Indirect cost rate = Budgeted support costs ÷ Budgeted professional labor-hours = $2,100,000 ÷ 14,000 hours = $150 per professional-hour 1c. Variation from normal costing that uses budgeted rates for direct costs Direct cost rate Budgeted professional labor costs Budgeted professional labor-hours = ÷ = $1,260,000 ÷ 14,000 hours = $90 per professional-hour Indirect cost rate
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