Heritage Gardens provides complete garden design and landscaping services. The c
ID: 2482441 • Letter: H
Question
Heritage Gardens provides complete garden design and landscaping services. The company uses a job order costing system to track the costs of its landscaping projects that were in progress during May. There was no work in progress at the beginning of May. Designers hours; Williams 200, Chandler 80, Nguyen 120. Direct materials Williams $4,800, Chandler $1,800, Nguyen $3,600. Direct Labor Williams $2,400, Chandler $1,000, Nguyen $ 1,500. Actual overhead costs were $16,000 fo May. Overhead costs are applied to projects on the basis of designer hours because most of the overhead is related to the costs of the garden design studio. The predetermined overhead rate is $45 per designer hour. The Williams and Chandler projects were completed in May; the Nguyen project was not completed by the end of the month. No other jobs were in process during May. 1. Compute the amount of overhead cost that would have been applied to each project during MAY. 2. Determine the cost of goods manufactured for May. 3. What is the accumulated cost of the work in process at the end of the month? 4. Determine the underapplied or overapplied overhead for May.
Explanation / Answer
Workings Designers hours wIlliams 200 chandler 80 Nguyen 120 total 400 Actual overhead 16000 overhead rate 40 wIlliams chandler Nguyen Total Designers hours 200 80 120 400 DM 4800 1800 3600 10200 DL 2400 1000 1500 4900 Overhead cost 8000 3200 4800 16000 Cost of goods man 15200 6000 9900 31100 Total cost 7200 2800 5100 Overhead applied 36 35 42.5 predetermined overhead rate 45 45 45 overhead applied 9000 3600 5400 Over applied overhead -1000 -400 -600