Compute the hourly direct labor cost rate. Compute the indirect cost allocation

Question

Compute the hourly direct labor cost rate. Compute the indirect cost allocation rate. Compute the predicted total job cost. Compute the amount of the bid given a profit percentage.

Compute the indirect cost allocation rate. Compute the predicted total job cost. Compute the amount of the bid given a profit percentage.

E3-20A Compute a predetermined overhead rate and calculate cost of jobs based on direct labor hours (Learning Objectives 3 & 4) Elkland Heating & Cooling installs and services commercial heating and cooling systems. Elkland uses job costing to calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labor hours spent on that job. At the beginning of the current year, Elkland estimated that its overhead for the coming year would be $61,500. It also anticipated using 4,100 direct labor hours for the year. In November, Elkland started and completed the following two jobs: Job 101 Direct materials used .. Direct labor hours used Job 102 $10,000 72 $15,000 155 Elkland paid a $24-per-hour wage rate to the employees who worked on these two jobs

Explanation / Answer

Predetermined overhead rate Based on direct labor Hr =Overhead Cost/Direct Labor Hr =61500/4100 =$15 per direct labor hr

Overhead Allocated to Job

3

Job 101 Job 102 Direct Labor Hr Uded 155 72 Overhead Rate 15 15 Overhead Allocated to Job 2325 1080

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