Question

Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process:

Answer 1

Answer and Explanation:

1. The computation of the number of direct labor hours for each job is as follows

Number of direct labor hours = Direct labor per cost ÷ direct labor wage rate per hour

For Job 93

= $2,160 ÷ $18 per hour

= 120 hours

For job 94

= $5,400 ÷ $18 per hour

= 300 hours

For job 95

= $2,610 ÷ $18 per hour

= 145 hours

For job 96

= $900 ÷ $18 per hour

= 50 hours

2. The overhead applied for each job is

Overhead applied is

= Number of direct labor hours × overhead rate

For Job 93

= 120 hours × $8

= $960

For job 94

= 300 hours × $8

= $2,400

For job 95

= 145 hours × $8

= $1,160

For job 96

= 50 hours × $8

= $400

3. The preparation of the job order cost sheet is presented below:

Particulars       Job 93          Job 94          Job 95            Job 96

Beginning

balance            $8,750         $7,300

Direct

materials         $950             $4,500        $3,300               $1,300

Direct

labor                $2,160          $5,400         $2,610               $900

Applied

overhead         $960            $2,400         $1,160               $400

Total                $12,820         $19,600       $7,070              $2,600

4. The balance in work in process as on August 31 is

= Total job cost - cost of completed jobs

= ($12,820 + $19,600 + $7,070 + $2,600) - $12,820

= ($42,090 - $12,820)

= $29,270

5. Now the price of Job 93 is

= Job cost of 93 + Job cost of 93 × given percentage

= $12,820 + $12,820 × 40%

= $12,820 + $5,128

= $17,948