Question

Characteristics of Production Process, Cost Measurement

Vince Melders, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated the following for the year:

Number of direct labor hours	6,870
Direct labor cost	$68,700
Overhead cost	$49,464

During the year, the following actual amounts were experienced:

Number of direct labor hours	6,030
Direct labor incurred	$66,330
Overhead incurred	$48,240.00

Required:

1. Should EcoScape use process costing or job-order costing?

- Select your answer -Process costingJob-order costingItem 1

2. If EcoScape uses a normal costing system and overhead is applied on the basis of direct labor hours,

What is the overhead rate? Round your answer to the nearest cent.

$ per direct labor hour

What is the average actual wage rate?

$ per direct labor hour

What is the cost of an installation that takes $3,470 of direct materials and 20 direct labor hours?

$

Answer 1

page=0 Inswer - Required Given Ecoscape estimate the following for the year Number & direct labor howes = 6870 direct labor cost = $68400 Ovex head cost = $49464 during the year , the following actual amounts were experienced. number of direct labor howus = 6030 dixieet (abor in cured = $66330 Overhead incurred = $48240.00 D) should feoscope use process costing of job-order - costing Since each pob is different using different materials and above, we need job orden costing a) Overhead rate : - estimated overhead cost estimate direct laborway howers

page-02 $ 49464 6870 loverhead sate - $ 4,20 per direct labowy houer -> average actual wage rate : actual direct labour cost actual wage rate - actual direct labour hours $ 66330 6030 actual wage rate = $11) pen direct labour hour y cost of an installation that takes $ 3470 o direct materials and do direct labor how's - divieet material + artual dieet labour + Overhead applied -) $3470+($ 1x ao direct labor hours) +($ 7,20 x 20 direct Cabor haws) - $3470+ $ 200 + $144 - $ 3834