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Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Job Costing; Service Industry
The Joshi CPA firm has the following budget for 2010:
Direct labor (for professional hours charged to clients) | $180,000 |
Overhead |
|
Indirect materials | $ 25,000 |
Indirect labor | 125,000 |
Depreciation—Building | 25,000 |
Depreciation—Furniture | 2,500 |
Utilities | 28,000 |
Insurance | 2,400 |
Property taxes | 2,600 |
Other expenses | 14,500 |
Total | $225,000 |
The firm uses direct labor cost as the cost driver to apply overhead to clients. During January, the firm worked for many clients; data for two of them follow:
Barry account |
|
Direct labor | $2,200 |
Miles account |
|
Direct labor | $8,400 |
Required
1. Compute Joshi’s budgeted overhead rate. Explain how this is used.
2. Compute the amount of overhead to be charged to the Barry and Miles accounts using the predetermined overhead rate calculated in requirement 1.
3. Compute a separate job cost for the Barry and the Miles accounts.
Verified
Step 1 of 4
The formula for calculating predetermined overhead rate as follows:
Step 2 of 4
Step 3 of 4
Step 4 of 4
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