Question

Larry’s Lawn Services provides custom landscaping for homes and businesses and uses job order costing to capture the cost of its landscaping jobs. There are no jobs in process at the beginning of May. Listed below are data concerning the three landscaping jobs conducted during May.
Southside Oceanview Rocky Heights
Direct materials $5,000 $6,890 $6,250
Landscaper labor costs $4,680 $5,850 $5,200
Landscaper hours 72 90 80

Overhead costs are applied to jobs on the basis of landscaper hours, and the predetermined overhead rate is $63 per landscaper hour. The Southside job is the only incomplete job at the end of May. Actual overhead for the month was $15,626.

Required:
a. Determine the cost of each job.
b. Indicate the balance of the Landscape Contracts in Process account at the end of May.
c. Calculate the ending balance of the Operating Overhead account for May.

Answer 1

Answer:

a. Southside     =  $14,216  , Oceanview   =  $18,410 and Rocky Heights = $16,490

b. Balance = $380 , Under-Applied Overheads.

Explanation:

Cost of each job

                                           Southside     Oceanview     Rocky Heights

Direct materials                    $5,000           $6,890             $6,250

Landscaper labor costs        $4,680           $5,850             $5,200

Overhead Cost at $63 / hr   $4,536           $5,670              $5,040

Total Cost                             $14,216           $18,410              $16,490

Overheads T - Account

Debit  :

Cash (Actual Overheads)    $15,626

Total                                      $15,626

Credit :

Work In Process :

Southside                              $4,536

Oceanview                            $5,670

Rocky Heights                        $5,040

Under-Applied Overheads      $380

Total                                      $15,626