Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 38

Job Costing

Work in process inventory for Bradley Inc. at the beginning of the year was a single job,Job 125 :

Job	Materials	Labor	Overhead	Total
125	$22,500	$22,000	$33,000	$77,500

The Company’s actual cost incurred during the year are as follows:

		Incurred by Jobs
Jobs	Materials	Labor	Other	Total
125	$1,000	$10,000	—	$11,000
128	26,000	18,000	—	44,000
129	12,000	34,000	—	46,000
1 30	4,000	16,000	—	20,000

	Materials	Labor	Other	Total
Indirect materials and supplies	$30,000	—	—	$30,000
Indirect labor	—	$23,000	—	23,000
Employee benefits	—	—	$46,000	46,000
Depreciation	—	—	12,000	12,000
Supervision	—	15,000	—	15,000

The Company’s budgeted costs for the year are as follows:

Budgeted overhead
Variable
Indirect materials	$16,000
Indirect labor	56,000
Employee benefits	24,000
Fixed
Supervision	20,000
Depreciation	12,000
Total	$128,000
Budgeted direct labor dollars	$ 80,000
Rate per direct labor dollar ($128,000/$80,000)	160%

Required

1. What was the actual factory overhead for Bradley, Inc for the year?

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2. What was overapplied or underapplied overhead for the year?

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3. Job 125 was the only job completed and sold in the year. What amount was included in the cost of the goods sold for this job?

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4. What was the amount of Work-in-Process Inventory at the end of the year?

Step 1 of 5

Overapplied overhead is the case when the applied factory overhead cost is greater than the actual factory overhead cost. Underapplied overhead is the case when the applied factory overhead cost is lesser than the actual factory overhead cost.