Week 4 CEX.05.03.ALGO CEX.05.01.ALGO EX.05.12.ALGO CEX.05.05.ALGO EX.05.19.ALGO

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Week 4

CEX.05.03.ALGO

CEX.05.01.ALGO

EX.05.12.ALGO

CEX.05.05.ALGO

EX.05.19.ALGO

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Job Costs Using Activity-Based Costing

Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows:

Heitger worked on four jobs in July. Data are as follows:

By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.

Required:

1. Calculate the activity rates for each of the three overhead activities. Round all activity rates to the nearest cent.

2. Prepare job-order cost sheets for each job showing all costs through July 31.

When required, round your answers to the nearest dollar. If an amount is zero, enter "0".

3. Calculate the balance in Work in Process on July 31.
$

4. Calculate the cost of goods sold for July.
$

5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46?

$   

Activity Cost Driver Amount of Driver Materials handling $60,250 Number of moves 2,500 Engineering 166,000 Number of change orders 10,000 Other overhead 307,800 Direct labor hours 54,000

Explanation / Answer

Computation of Activity rate Activity cost pool Activity Measure Estimated overhead cost Expected activity Activity rate of activity cost pool Material Handling No. of Moves $60,250.00 2500 $24.10 Per Move Engineering No. of Change Order $166,000.00 10000 $16.60 Per Change Other Overhead Direct Labour Hours $307,800.00 54000 $5.70 Per Hour $288,000.00 Heitger Company Job order Cost Sheet job13-43 Job-13-44 Job13-45 Job13-46 Beg Balance $20,800.00 $18,100.00 $2,600.00 $0.00 Direct Material $6,300.00 $9,050.00 $14,100.00 $9,900.00 Direct Labour Cost $840.00 $1,100.00 $1,700.00 $110.00 Material Handling $1,132.70 $1,229.10 $723.00 $96.40 Engineering $514.60 $697.20 $249.00 $332.00 Other Overhead $4,788.00 $6,270.00 $9,690.00 $627.00 Total $34,375.30 $36,446.30 $29,062.00 $11,065.40 Working Note: Calculation of Activity Cost. job13-43 Job-13-44 Job13-45 Job13-46 No. of Move 47 51 30 4 Material Handling Cost @$24.10 Per Move $1,132.70 $1,229.10 $723.00 $96.40 No. of Change Order 31 42 15 20 Engineering Cost @$16.60/ Change $514.60 $697.20 $249.00 $332.00 Direct Labour Hours 840 1100 1700 110 Other Overhead @$5.70/Hour $4,788.00 $6,270.00 $9,690.00 $627.00 Computation of Cost of Goods Sold Computation of WIP Cost for Job-13-43 $34,375.00 Cost for Job-13-45 $29,062.00 Cost for Job 13-44 $36,446.30 Cost for Job 13-46 $11,065.00 Cost of Goods Sold $70,821.30 Cost of Goods Sold $40,127.00

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