Problem 5-16 Applying Overhead in a Service Company [LO2, LO3, LO4] Leeds Archit
ID: 2377611 • Letter: P
Question
Problem 5-16 Applying Overhead in a Service Company [LO2, LO3, LO4] Leeds Architectural Consultants uses a job-order costing system and applies studio overhead to jobs on the basis of direct staff costs. Because Leeds Architectural Consultants is a service firm, the names of the accounts it uses are different from the names used in manufacturing companies. The following costs were recorded in January Cost of subcontracted work (comparable to direct materials) $ 231,700 Direct staff costs (comparable to direct labor) $ 76,600 Studio overhead (comparable to manufacturing overhead cost applied) $ 132,518 Cost of work completed (comparable to cost of goods manufactured) $ 388,100 There were no beginning inventories in January. At the end of January, only one job was still in process. This job (Lexington Gardens Project) had been charged with $6,620 in direct staff costs 1Compute the predetermined overhead rate that was used during January 2Complete the following job cost sheet for the partially completed Lexington Gardens Project. (Hint: Cost of goods manufactured equals beginning work in process inventory plus manufacturing costs incurred less ending work in proce
Explanation / Answer
Compute the predetermined overhead rate that was used during January.
132,518 /76,600 = $1.73 per direct staff dollar