Answer:
Part 1
$82 per professional labor hour
Part 2
Job 141 = $16,383 ,Job 142 = $32,766 , and Job 143 = $17,399
Part 3
Cost of Goods Sold = $49,149
Ending Work In Process Inventory = $17,399
Part 4
Overheads Under- applied = $10,480
Part 5
$102.00 per professional labor hour
Explanation:
Labor Cost per hour = Total Cost ÷ Total hours
= $23,580 ÷ ( 129 + 258 + 137)
= $45.00 per hour
<em>We know that,</em>
Overhead allocation rate = Estimated Overhead Costs ÷ Estimated Professional labor hours
<em>But using Job 141 we can solve as,</em>
Total for Job 141 = $32,766
<em>Less </em>Labor Cost (258 hours × $45.00) = $11,610
Overheads allocated to Job 141 = $21,156
<em>Then,</em>
Overhead allocation rate = $21,156 ÷ 258
= $82 per professional labor hour
<u>Total Costs</u>
Job 140 Job 141 Job 142
Direct Labor $5,805 $11,610 $6,165
Overheads $10,578 $21,156 $11,234
Total Cost $16,383 $32,766 $17,399
<u>Cost of Goods Sold</u>
Note : Only Finished Jobs are accounted in this figure
Total Cost of Job 140 $16,383
Total Cost of Job 141 $32,766
Cost of Goods Sold $49,149
<u>Work In Process Inventory</u>
Note : Only Incomplete Jobs are accounted in this figure
Total Cost of Job 142 $17,399
<u>Application of Overheads</u>
Actual Overheads (given) = $53,448
Applied Overheads ($82 × ( 129 + 258 + 137)) = $42,968
Actual Overheads > Applied Overheads therefore we have an Under-applied situation.
Overheads Under- applied = $10,480 ($53,448 - $42,968)
<u>Reasonable Overhead Rate.</u>
Rate that does not produce variances is reasonable !
Reasonable Overhead Rate. = Actual Overheads ÷ Total Professional Hours
= $53,448 ÷ 524 hours
= $102.00 per professional labor hour
