Exercise 20-12 Don Lieberman and Associates, a CPA firm, uses job order costing

Question

Exercise 20-12 Don Lieberman and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November. Lynn Brian Mike Direct materials $600 $400 $200 Auditor labor costs $5,400 $6,600 $3,375 Auditor hours 72 88 45 Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $50 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $11,000. (a) Determine the cost of each job. Cost Lynn $ Brian $ Mike $ (b) Indicate the balance of the Service Contracts in Process account at the end of November. Balance in service contracts in process account $ (c) Calculate the ending balance of the Operating Overhead account for November. Balance in operating overhead account $

Explanation / Answer

a) Lynn Brian Mike total Direct materials 600 400 200 1200 direct labor 5,400 6,600 3,375 15,375 overhead applied 3600 4400 2250 10250 Cost of each job 9600 11400 5825 26825 answer b) Balance in process account 11400+5825 17225 answer c) Balance in operating overhead account Actual overhead - applied overhead 11,000-10,250 750 Answer

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