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Example1PowellCompanyusesajobcostingsystem.Duringthe monthof May,Powellspentmostof itstime onjobA50,whichwasstartedlate inApril.Followinginformationare costforjobA50,other Maycosts,andrelevantannualestimates.Materialsissued:80%forDirectUseonjobA50and20%forIndirectUsethroughMay$5,000Labor:DirectLaborforjobA50([email protected]$20perDLH)6,000IndirectLaborforMay310OtherMayCosts:Depreciation(70%Factoryand30%Administrative)1,000Other(70%Factoryand30%Administrative)700OverheadCostDriver:DirectLaborHours(DLH)EstimatedAnnualOverhead21,000EstimatedAnnualDLH3,000Markup–asapercentofcost40%Required:(1) Whatisthe overheadtobe appliedforMaytojobA50uponcompletiononMay15?(2) Whatare totalmanufacturingcostsforMayfor jobA50?(3) Assumingthatthe May1work-in-processinventoryfor jobA50was$400,howmuchwouldfinishedgoodsinventoryincreaseasa resultof the completionof thisjobonMay15?(4) Whatisthe profitonjobA50whenitissoldonMay15?(5) Calculate theunder-orover-appliedoverheadforMay.
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