Share
Explore BrainMass

Job Costing

Job costing

The Blanc Co employs a job order cost system to account for its costs. The company has 3 production depts.. Separate departmental cost driver rates are employeed because the demand for support activities for the 3 departments is very different. All jobs generally pass through all 3 production departments. Data regarding the hourly direct labor rates, cost driver rates, & 3 jobs which work was done during June appear below. Jobs 101 & 102 were completed during June, while Job 103 was not completed as of June 30. The costs charged to jobs not completed at the end of a month are shown as work in process inventory at the end of that month & at the beginning of the next month:

Prod Depts Direct Labor Rate Cost Driver Rates

Dept 1 $12 150% of direct material cost
Dept 2 18 $8 per machine hour
Dept 3 15 200% of direct labor cost

Job 101 Job 102 Job 103
Beginning work in process $25,500 $32,400 $0
Direct materials:
Dept 1 $40,000 $26,000 $58,000
Dept 2 3000 5000 14,000
Dept 3 0 0 0

Direct Labor Hours:
Dept 1 500 400 300
Dept 2 200 250 350
Dept 3 1500 1800 2500

Machine Hours:
Dept 1 0 0 0
Dept 2 1200 1500 2700
Dept 3 150 300 200

A. Determine the total cost of completed Job 101.
B. Determine the total cost of completed Job 102.
C. Determine the ending balance of work in process inventory for Job 103 as of June 30.

Charging for service activity costs

Airport Service Co operates scheduled coach service from Boston's Logan Airport to downtown Boston & to Cambridge. A common scheduling service center at the airport is responsible for ticketing & customer service for both routes. The service center is regularly staffed to service traffic of 2400 passengers per week: 2/3 for downtown Boston passengers & the balance for Cambridge passengers. The cost to operate this service center is $7200 per week normally, but it is higher during weeks when additional help is required to service higher traffic levels. The service center costs & number of passengers serviced during the 5 weeks of August follow:

Week Cost Boston Passengers Cambridge Passengers
1 $7200 1600 800
2 7200 1500 900
3 7600 1650 800
4 7800 1700 850
5 7200 1700 700

How much of the service center costs should be charged to the Boston service & how much to the Cambridge service?

Job costing

The Gondo Co uses a job order costing system at its plant in Green Bay, WI. The plant has a machining dept & a finishing dept. The co. uses 2 cost driver rates for allocating mfg support costs to job orders: one on the basis of machine hours for allocating machining dept support costs & the other on the basis of direct labor cost for allocating the finishing dept support costs. Estimates for 2006 follow:

Machining Dept Finishing Dept
Manufacturing Support Cost $500,000 $400,000
Machine Hours 20,000 2,000
Direct Labor Hours 5000 22,000
Direct Labor Cost $150,000 $500,000

A. Determine the 2 departmental support cost driver rates.
B. During July 2006, cost records for job 511 show the following:

Machining Dept Finishing Dept
Direct Labor Cost $12,000 $2000
Direct Labor Costs $ 300 $ 1200
Direct Labor Hours 10 50
Machine Hours 80 8

Determine the total costs charged to job 511 in July 2006.
C. Explain why Gondo Co. uses two different cost driver rates in its job costing system.

Attachments

Solution Summary

The solution explains how to calculate the cost of jobs using job order costing

$2.19