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25 March, 22:40

Applying Overhead to Jobs, Costing Jobs Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process: Job 93 with a beginning balance of $8,750 and Job 94 with a beginning balance of $7,300. Jagjit applies overhead at the rate of $8 per direct labor hour. Direct labor wages average $18 per hour. Data on August costs for all jobs are as follows:

Job 93 Job 94 Job 95 Job 96

Direct materials $950 $4,500 $3,300 $1,300

Direct labor cost 2,160 5,400 2,610 900

During August, Jobs 95 and 96 were started. Job 93 was completed on August 17, and the client was billed at cost plus 40%. All other jobs remained in process.

Required:

(1) Calculate the number of direct labor hours that were worked on each job in August.

(2) Calculate the overhead applied to each job during the month of August.

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Answers (1)
  1. 25 March, 22:46
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    Job 93 Job 94 Job 95 Job 96

    1. Labor Hours 120 300 145 50

    2. Overhead applied rate $906 $2,400 $1,160 $400

    Explanation:

    Labor rate per hour = $18

    Labor hours = Total Labor cost / rate per hour

    Job 93 = $2,160 / $18 = 120 hours

    Job 94 = $5,400 / $18 = 300 hours

    Job 95 = $2,610 / $18 = 145 hours

    Job 96 = $900 / $18 = 50 hours

    Overhead applied rate = Labor Hours x overhead applied rate

    Job 93 = 120 x $8 = $960

    Job 94 = 300 x $8 = $2,400

    Job 95 = 145 x $8 = $1,160

    Job 96 = 50 x $8 = $400
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