Vista Landscaping uses a job order costing system to track the costs of its land
ID: 2387000 • Letter: V
Question
Vista Landscaping uses a job order costing system to track the costs of its landscaping projects. The company provides garden design and installation services for its clients. The table below provides data concerning the three landscaping projects that were in progress during April. There was no work in progress at the beginning of April.Designer Hours- 120 (Harris), 100 (Chan), 90 (James)
Direct Materials Cost- $4500 (Harris), $3700 (Chan), $1400 (James)
Direct Labor Cost- $9600 (Harris), $8000 (Chan), $7200 (James)
Actual overhead costs were $30000 for April. Overhead costs are applied to projects on the basis of designer hours because most of the overhead is related to the cost of the garden design studio. The predetermined overhead rate is $90 per designer hour. The Harris and Chan projects were completed in April; the James project was not completed by the end of the month.
1. Compute the amount of overhead cost that would have been charged to each project during April.
2. Prepare a journal entry showing the completion of the Harris and Chan projects and the transfer of costs to the Completed Projects (i.e., Finished Goods) account.
3. What is the balance in the Work in Progress account at the end of the month
4. What is the balance in the Overhead account at the end of the month? What is the balance called?
Explanation / Answer
1. Compute the amount of overhead cost that would have been charged to each project during April. Per designer hours = 30000/310 = 96.75 Harris = 120*96.75 = 11612 Chan = 100*96.75 = 9677 James = 90*96.75 = 8709 4. What is the balance in the Overhead account at the end of the month? What is the balance called? Already charged = 310 * 90 =27900 Balance = 30000-27900 = 2100. it is called under recovered overhead.
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