Bob and Beth Ford retired from the food services industry and began catering wed

Question

Bob and Beth Ford retired from the food services industry and began catering wedding receptions on a limited basis. The major costs in setting up their business included: linens, $2,000; two complete silver services, $1,900; glass plates and cups, $2,300; and cake-decorating tools and accessories, $800. It is expected that all of these items will last 10 years with no salvage value. Bob and Beth do all their food preparation in their apartment and have found that, in an average month, their utility bill is $300 higher than when they did not cater. All baking and cooking supplies are treated as "direct materials," and the only other cost incurred is liability insurance at $2,400 per year. All direct materials are purchased at a local grocery for cash, and Bob and Beth pay themselves an hourly wage of $31 per hour. During the month of June, Bob and Beth catered five weddings.

Prepare job cost sheets for each of the five catering jobs.


Materials
Labor Hours

Redfern wedding $600 29
Miller wedding 870 42
Walker wedding 550 22
DeSilva wedding 1,860 93
Estes wedding 760 34

The overhead allocation base is labor hours with an estimated 1,000 hours per year, and billings are at 120 percent of job cost. Overhead allocations and markups are rounded to the nearest dollar.

**How do I figure out the Overhead?**

Explanation / Answer

Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Over Heads : Depreciation Amount Invested / 10 Linens 2000 Silver Services 1900 Glass Plates and Cups 2300 Cake Decorating Tools 800 Total Amount Invested 7000 Annual Depreciation 7,000 / 10 700 Annual Utilities(300 *12) 3600 Total OverHeads 4300 Annual Estimated Hours 1000 Over Head Rate 4300 /1,000 $4.3per hour Labor Cost Hours worked * 31 Overhead Hours worked *4.3 Job Material Labor Over Head Total Red Fern Wedding 600 899 124.7 1623.7 Miller Wedding 870 1302 180.6 2352.6 Walker Wedding 550 682 94.6 1326.6 De Silva Wedding 1860 2883 399.9 5142.9 Estes Wedding 760 1054 146.2 1960.2 12406

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