Question

Cost of a Manufactured Product- Job Costing System Ross Poldark is a contractor specializing in custom-built Jacuzzis. As of May 1, 2018, Poldark has incurred the following costs for each of the jobs listed below. Poldark uses the Job Order Cost system. DM DL FOH TOTAL ENYS 2,500 2,000 1,200 5,700 CARNE TRURO $ 2,000 $ 900 1,200 800 720 480 $ 3,920 $ 2,180 $ During May, Poldark incurs the following costs below. Poldark begins one job during the month of May (George) and completes the other three during the course of the month (Enys, Carne, and Truro). Factory Overhead is charged to jobs on the basis of $.60 per dollar of direct labor hours. ENYS $ DM DL 500 400 CARNE TRURO GEORGE $ 600 $ 2,300 $ 1,900 1,300 2,300 1,000 FOH TOTAL Determine the total cost of each of the completed jobs in the space below: ENYS CARNE TRURO DM DL FOH TOTAL

Answer 1

Calculation of FOH

It is given that FOH is $0.60 per direct labor hour, It is assumed that each hour cost is $1.

That means FOH is 60% of DL.

	ENYS	CARNE	TRURO	GEORGE
DL	$        400	$    1,000	$    1,300	$    2,300
FOH (60% of DL)	$        240	$        600	$        780	$    1,380

Costs incurred during May

	ENYS	CARNE	TRURO	GEORGE
DM	$              500	$              600	$          2,300	$        1,900
DL	$              400	$          1,000	$          1,300	$        2,300
FOH (60% of DL)	$              240	$              600	$              780	$        1,380
TOTAL	$          1,140	$          2,200	$          4,380	$        5,580

	Balance as on May 1			Costs incurred during May				Total Costs
	ENYS	CARNE	TRURO	ENYS	CARNE	TRURO	GEORGE	ENYS	CARNE	TRURO	GEORGE
DM	$          2,500	$          2,000	$              900	$           500	$        600	$    2,300	$    1,900	$    3,000	$    2,600	$    3,200	$    1,900
DL	$          2,000	$          1,200	$              800	$           400	$    1,000	$    1,300	$    2,300	$    2,400	$    2,200	$    2,100	$    2,300
FOH (60% of DL)	$          1,200	$              720	$              480	$           240	$        600	$        780	$    1,380	$    1,440	$    1,320	$    1,260	$    1,380
TOTAL	$          5,700	$          3,920	$          2,180	$        1,140	$    2,200	$    4,380	$    5,580	$    6,840	$    6,120	$    6,560	$    5,580

Total costs of completed jobs

	ENYS	CARNE	TRURO
DM	$          3,000	$          2,600	$          3,200
DL	$          2,400	$          2,200	$          2,100
FOH (60% of DL)	$          1,440	$          1,320	$          1,260
TOTAL	$          6,840	$          6,120	$          6,560

Work in progress at the end of May

	GEORGE
DM	$          1,900
DL	$          2,300
FOH (60% of DL)	$          1,380
TOTAL	$          5,580

Gross profit for completed jobs:

	ENYS	CARNE	TRURO
Sales	$        12,000	$        12,000	$        12,000
DM	$          3,000	$          2,600	$          3,200
DL	$          2,400	$          2,200	$          2,100
FOH (60% of DL)	$          1,440	$          1,320	$          1,260
TOTAL	$          6,840	$          6,120	$          6,560
Gross Profit	$          5,160	$          5,880	$          5,440

Overheads applied to jobs

	ENYS	CARNE	TRURO	GEORGE	TOTAL
FOH	$        240	$        600	$        780	$        1,380	$        3,000

Actual overheads	$          3,250
Overheads applied to jobs	$          3,000
Under applied	$              250

The effect of this is profit is overstated by $250.