Question

Applying Overhead to Jobs, Costing Jobs Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process: Job 93 with a beginning balance of $8,750 and Job 94 with a beginning balance of $7,300. Jagjit applies overhead at the rate of $8 per direct labor hour. Direct labor wages average $18 per hour. Data on August costs for all jobs are as follows:
Job 93 Job 94 Job 95 Job 96
Direct materials $950 $4,500 $3,300 $1,300
Direct labor cost 2,160 5,400 2,610 900

During August, Jobs 95 and 96 were started. Job 93 was completed on August 17, and the client was billed at cost plus 40%. All other jobs remained in process.

Required:
(1) Calculate the number of direct labor hours that were worked on each job in August.
(2) Calculate the overhead applied to each job during the month of August.

Answer 1

Answer:

                                         Job 93       Job 94       Job 95       Job 96

1. Labor Hours                     120            300             145              50

2. Overhead applied rate   $906         $2,400       $1,160         $400

Explanation:

Labor rate per hour = $18

Labor hours = Total Labor cost / rate per hour

Job 93 = $2,160 / $18 = 120 hours

Job 94 = $5,400 / $18 = 300 hours

Job 95 = $2,610 / $18 = 145 hours

Job 96 = $900 / $18 = 50 hours

Overhead applied rate = Labor Hours x overhead applied rate

Job 93 = 120 x $8 = $960

Job 94 = 300 x $8 = $2,400

Job 95 = 145 x $8 = $1,160

Job 96 = 50 x $8 = $400