Bluebird Tire manufactures tires for all-terrain vehicles. BluebirdBluebird uses
ID: 2605022 • Letter: B
Question
Bluebird Tire manufactures tires for all-terrain vehicles.
BluebirdBluebird
uses job costing and has a perpetual inventory system. On
NovemberNovember
22,
BluebirdBluebird
received an order for
170170
TX tires from ATV Corporation at a price of
$ 75$75
each. The job, assigned number 298, was promised for
DecemberDecember
10. After purchasing the materials,
BluebirdBluebird
began production on
NovemberNovember
30 and incurred the following direct labor and direct materials costs in completing the order:
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BluebirdBluebird
allocates manufacturing overhead to jobs on the basis of the relation between expected overhead costs
($ 396 comma 000$396,000)
and expected direct labor hours
(18 comma 00018,000).
Job 298 was completed on
DecemberDecember
3 and shipped to ATV on
DecemberDecember
5.Read the requirements
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.
Requirement 1. Prepare a job cost record for Job 298.
Calculate the predetermined overhead rate, then apply manufacturing overhead to the job. Begin by identifying the formula and computing the predetermined overhead rate.
Estimated yearly overhead costs
/
Estimated yearly direct labor hours
=
Predetermined overhead rate
$396,000
/
18,000
=
$22
per hour
Complete the job cost record in order of direct materials, direct labor, and allocated manufacturing overhead. Then prepare the overall cost summary. (List the dates in chronological order. Enter the labor time records in the correct row according to date. Complete only necessary answer boxes. If a box is not used in the table leave the box empty; do not enter a zero.)
Job Cost Record
Job No.
298
Customer Name
ATV Corporation
Job Description
170 TX tires
Date Promised 12-10
Direct Materials
Requisition
Date
Number
Amount
20XX
11–30
437
$720
12–2
439
400
12–3
501
1,400
Totals
$2,520
Date Started 11-30
Direct Labor
Labor Time
Record
Number
Amount
1896
$216
1904
480
$696
Date Completed 12-3
Manufacturing Overhead Allocated
Date
Rate
Amount
12–3
per
direct labor hr.
Overall Cost Summary
Direct Materials
Direct Labor
Manufacturing Overhead
Allocated
Total Job Cost
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Data Table
Date
Labor Time Record No.
Description
Amount
11/30
1896
12 hours at $18
$216
12/3
1904
30 hours at $16
$480
Materials
Requisition
Date
No.
Description
Amount
11/30
437
60 lbs. rubber at $12
$720
12/2
439
40 meters polyester fabric at $10
$400
12/3
501
100 meters steel cord at $14
$1,400
PrintDone
Requirements
1.
Prepare a job cost record for Job 298.
2.
Calculate the total profit and the per-unit profit for Job 298.
Estimated yearly overhead costs
/
Estimated yearly direct labor hours
=
Predetermined overhead rate
Explanation / Answer
Req. 1
Job Cost Record
JOB NO. 298
CUSTOMER NAME AND ADDRESS ATV Corporation
JOB DESCRIPTION 170 TX tires
DATE PROMISED 12-10
DATE STARTED 11-30
DATE COMPLETED 12-3
DATE
DIRECT MATERIALS
DIRECT LABOR
MANUFACTURING OVERHEAD ALLOCATED
REQUISITION NO.
AMOUNT
LABOR TIME RECORD NO.
AMOUNT
DATE
RATE
AMOUNT
20
XX
11
30
437
$720
1896
$216
12
3
$22 per direct
12
2
439
400
labor houra
$924
3
501
1,400
1904
480
OVERALL COST SUMMARY
DIRECT MATERIALS.………...
$2520
DIRECT LABOR............………
696
MANUFACTURING OVERHEAD ALLOCATED…...
924
Totals
$2520
$696
TOTAL JOB COST.......…..
$4140
aPredetermined
=
$396,000
=
$22 per direct labor hour
mfg. overhead rate
18000
Overhead allocated
=
(12 hrs + 30 hrs) × $22 per DL hour
=
$924
Req. 2
Job 298
Sales ($75 × 170 tires)
$ 12750
Less cost of job (from Req. 1)
4140
Total profit on job
$ 8610
Divide by number of tires
÷ 170
Per-unit profit
$ 50.65
Job Cost Record
JOB NO. 298
CUSTOMER NAME AND ADDRESS ATV Corporation
JOB DESCRIPTION 170 TX tires
DATE PROMISED 12-10
DATE STARTED 11-30
DATE COMPLETED 12-3
DATE
DIRECT MATERIALS
DIRECT LABOR
MANUFACTURING OVERHEAD ALLOCATED
REQUISITION NO.
AMOUNT
LABOR TIME RECORD NO.
AMOUNT
DATE
RATE
AMOUNT
20
XX
11
30
437
$720
1896
$216
12
3
$22 per direct
12
2
439
400
labor houra
$924
3
501
1,400
1904
480
OVERALL COST SUMMARY
DIRECT MATERIALS.………...
$2520
DIRECT LABOR............………
696
MANUFACTURING OVERHEAD ALLOCATED…...
924
Totals
$2520
$696
TOTAL JOB COST.......…..
$4140