Job Costing Elite Custom Cabinetry Company produces custom cabinets ordered to exact measure based on CAD drawings provided by kitchen remodeling firms.
| Job Costing | |||||||||||||
| Elite Custom Cabinetry Company produces custom cabinets ordered to exact measure based on CAD drawings provided by kitchen remodeling firms. | |||||||||||||
| As of June 1, there was one order in production (job 5-3), and two new jobs were started in June (jobs 6-1 and 6-2). | |||||||||||||
| Job 5-3 had incurred costs as follows prior to the month of June: direct material, $4,600; direct labor, $6,550; overhead, $3,400. | |||||||||||||
| There were no finished goods, because orders ship out upon completion. Raw material inventory was $18,600 as of June 1. | |||||||||||||
| The following events occurred during June: | |||||||||||||
| 1. Purchased additional raw materials of $20,000. | |||||||||||||
| 2. Incurred direct labor hours of 640 hours at a rate of $24.00 during the month of June. | |||||||||||||
| 3. Incurred total manufacturing overhead costs of $18,400 during the month of June. | |||||||||||||
| 4. Assigned Direct materials and direct labor hours to jobs as follows: | |||||||||||||
| Actual | |||||||||||||
| Materials | Hours | ||||||||||||
| Job 5-3 | 2,300 | 112 | |||||||||||
| Job 6-1 | 8,700 | 320 | |||||||||||
| Job 6-2 | 5,420 | 208 | |||||||||||
| Totals | 16,420 | 640 | |||||||||||
| 5. The company uses direct labor hours to assign overhead to individual jobs, and the predetermined | |||||||||||||
| overhead rate is $28.00 per hour, based on the budget of 600 labor hours per month. | |||||||||||||
| 6. Job 5-3 and 6-1 are completed and shipped in the month of June. Job 6-2 is in progress at month end. | |||||||||||||
| A. Calculate the completed cost of jobs 5-3 and 6-1. | |||||||||||||
| B. Calculate the cost of work in process (job 6-2). | |||||||||||||
| C. Calculate over or under applied overhead for hours worked and rate per hour. |
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