Ryan & Marks, Design Consultants, has the following budget for the year: Direct labor (for professional hours charged to clients)$202,000Overhead Indirect materials 10,000Indirect labor 150,000Depreciation - Building 50,000Depreciation - Furniture 5,000Utilities 12,000Insurance 4,800Property taxes 5,200Other expenses 3,380Total$240,380The firm uses direct labor as the cost driver to apply overhead to clients. During January, the firm worked for many clients; data for two of them follow: Henderson account: Direct materials$400Direct labor 3,000Fisher account: Direct materials$5,380Direct labor 12,600Required:(a) Compute the company'sRyan & Marks budgeted overhead rate. Explain how this is used.(b) Compute the amount of overhead to be charged to the Henderson
and Fisher accounts using the predetermined overhead rate calculated in requirement (a).(c) Compute the separate job cost for the Henderson and Fisher accounts.
What will be an ideal response?
(a)
Budgeted overhead rate = 119% direct labor cost ($240,380/$202,000)
This is used to allocate an estimated overhead amount to each specific account based on the direct professional labor that has occurred for each account during the period.
(b)
Amount of overhead charged:
| Henderson Account: | $ | 3,570 | (119 | % | × | $ | 3,000 | ) |
| Fisher Account: | $ | 14,994 | (119 | % | × | $ | 12,600 | ) |
Computation of job cost:
| Cost | Henderson | Fisher | |||
| Direct materials | $ | 400 | $ | 5,380 | |
| Direct labor | 3,000 | 12,600 | |||
| Overhead | 3,570 | 14,994 | |||
| Total | $ | 6,970 | $ | 32,974 | |
You might also like to view...
The ACH network electronically transfers funds by crediting the collector's bank account and debiting the payer's bank account for the amount of a payment
Indicate whether the statement is true or false
Some period costs can be found in inventory accounts on the balance sheet
Indicate whether the statement is true or false
The North American Free Trade Agreement (NAFTA) promotes open trade globally
Indicate whether the statement is true or false
The federal legislative branch is unicameral and the federal constitution requires that state legislatures be tricameral
Indicate whether the statement is true or false