Chasse Homes Inc. manufactures mobile homes. Chasse uses ajob order cost system.

Question

Chasse Homes Inc. manufactures mobile homes. Chasse uses ajob order cost system. The time tickets from October jobs aresummarized below.

Job502                                  2,352

Job503                                   1,440

Job504                                   960

Job505                                   1,320

Factorysupervision                2,760

Factory overhead is applied to jobs on the basis of apredetermined overhead rate of $20 per direct labor hour. Thedirect labor rate is $12 per hour.

Explanation / Answer

Job 502

Total Factory laborcost        = Total factory labour hours X Per labourhour Rate Total factory labourhours      =

Job 502

2352 503 1440 504 960 505 1320 Total labour 6072 hours Total Factory laborcost        = 6072 X $12           = $72,864 Total FactoryOverhead        = Factory overhead hours X Overhead rate           = 2760 X $20           = $55,200 Factory Overheads transferred in toWork -in-progress and shown as expense in income statement.

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