Job order costing for a service company The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using job order costing. The following transactions occurred during August: August 3. Charged 510 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $240 per hour. 10. Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $14,500. 14. Charged 120 hours of professional time for the Shadow Creek trial at a rate of $300 per hour. 18. Received invoice from consultants Westerly and Henninger for $76,800 for expert testimony related to the Shadow Creek trial. 27. Applied office overhead at a rate of $75 per professional hour charged to the Shadow Creek case. 31. Paid administrative and support salaries of $33,500 for the month. 31. Used office supplies for the month, $11,300. 31. Paid professional salaries of $163,600 for the month. month. 31. Billed Shadow Creek $338,700 for successful defense of the case. a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. August 3 August 10 August 14 00 00 00 00 00 00

Job order costing for a service company The law firm of Prawitt and Bradford accumulates costs associated with individual cases, using job order costing. The following transactions occurred during August: August 3. Charged 510 hours of professional (lawyer) time to the Shadow Creek Co. breech of contract suit to prepare for the trial, at a rate of $240 per hour. 10. Reimbursed travel costs to employees for depositions related to the Shadow Creek case, $14,500. 14. Charged 120 hours of professional time for the Shadow Creek trial at a rate of $300 per hour. 18. Received invoice from consultants Westerly and Henninger for $76,800 for expert testimony related to the Shadow Creek trial. 27. Applied office overhead at a rate of $75 per professional hour charged to the Shadow Creek case. 31. Paid administrative and support salaries of $33,500 for the month. 31. Used office supplies for the month, $11,300. 31. Paid professional salaries of $163,600 for the month. month. 31. Billed Shadow Creek $338,700 for successful defense of the case. a. Provide the journal entries for each of these transactions. If an amount box does not require an entry, leave it blank. August 3 August 10 August 14 00 00 00 00 00 00

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Description: Job order costing for a service companyThe law firm of Prawitt and Bradford accumulates costs associated with individual cases, using job order costing. The following transactions occurred during August:August 3. Charged 510 hours of professional (l

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 8P

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Huron Manufacturing Co. uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and double-time for Saturday and Sunday. Also, a bonus of 1% of the employees earnings for the year is to be paid to the employees at the end of the fiscal year. The controller, the plant manager, and the sales manager disagree as to how the overtime pay and the bonus should be allocated. An examination of the first months payroll under the new union contract provisions shows the following: Analysis of the supporting payroll documents revealed the following: a. More production was scheduled each day than could be handled in a regular workday, resulting in the need for overtime. b. The Saturday and Sunday hours resulted from rush orders with special contract arrangements with the customers. The controller believes that the overtime premiums and the bonus should be charged to factory overhead and spread over all production of the accounting period, regardless of when the jobs were completed. The plant manager favors charging the overtime premiums directly to the jobs worked on during overtime hours and the bonus to administrative expense. The sales manager states that the overtime premiums and bonus are not factory costs chargeable to regular production but are costs created from administrative policies and, therefore, should be charged only to administrative expense. Required: 1. Evaluate each positionthe controllers, the plant managers, and the sales managers. If you disagree with all of the positions taken, present your view of the appropriate allocation. 2. Prepare the journal entries to illustrate the position you support, including the accrual for the bonus.
Cycle Specialists manufactures goods on a job order basis. During the month of June, three jobs were started in process. (There was no work in process at the beginning of the month.) Jobs Sprinters and Trekkers were completed and sold, on account, during the month (selling prices: Sprinters, 22,000; Trekkers, 27,000); Job Roadsters was still in process at the end of June. The following data came from the job cost sheets for each job. The factory overhead includes a total of 1,200 of indirect materials and 900 of indirect labor. Prepare journal entries to record the following: a. Materials used. b. Factory wages and salaries earned. c. Factory Overhead transferred to Work in Process d. Jobs completed. e. Jobs sold.
During the month, Job Arch2 used specialized machinery for 350 hours and incurred $700 in utilities on account. $400 in factory depreciation expense, and $200 in property tax on the factory. Prepare journal entries for the following: A. Record the expenses incurred. B. Record the allocation of overhead at the predetermined rate of $1.50 per machine hour.
Lorrimer Company has a job-order cost system. The following debits (credits) appeared in the Work-in-Process account for the month of June. During the month of June, direct labor totaled 30,000 and 24,000 of overhead was applied to production. Finished Goods was debited 100,000 during June. Lorrimer Company applies overhead at a predetermined rate of 80% of direct labor cost. Job number 83, the only job still in process at the end of June, has been charged with manufacturing overhead of 3,400. What was the amount of direct materials charged to Job number 83? a. 3,400 b. 4,250 c. 8,350 d. 7,580
A rush order was accepted by Bartley's Conversions for five van conversions. The labor time records for the week ended January 27 show the following (Hours not worked on vans are idle time andare not charged to the job.): All employees are paid 20 per hour, except Klembara, who receives 25 per hour. All overtime premium pay, except Klembara's, is chargeable to the job, and all employees, including Klembara, receive time-and-a-half for overtime hours. Required: 1. Calculate the total payroll and total net earnings for the week.Assume that an 18% deduction for federal income tax is requiredin addition to FICA deductions. Assume that none of the employees has achieved the maximums for FICA and unemploymenttaxes. 2. Prepare the journal entries to record and pay the payroll. 3. Prepare the journal entry to distribute the payroll to the appropriate accounts. 4. Determine the dollar amount of labor that is chargeable toeach van, assuming that the overtime costs are proportionateto the regular hours used on the vans. (First compute an average labor rate for each worker, including overtime premium,and then use that rate to charge all workers' hours to vans.)Round the labor rates to the nearest whole cent.
A company has the following transactions during the week. Purchase of $3,000 raw materials inventory Assignment of $700 of raw materials inventory to Job 7 Payroll for 10 hours and $3,000 is assigned to Job 7 Factory depreciation of $1,750 Overhead applied at the rate of $200 per hour What is the cost assigned to Job 7 at the end of the week?
Source Documents For each of the following independent situations, give the source document that would be referred to for the necessary information. Required: 1. Direct materials costing 460 are requisitioned for use on a job. 2. Greiners Garage uses a job-order costing system. Overhead is applied to jobs based on direct labor hours. Which source document gives the number of direct labor hours worked on Job 2004-276? 3. Pasilla Investigative Services bills clients on a monthly basis for costs to date. Job 3-48 involved an investigator following the clients business partner for a week by automobile. Mileage is billed at number of miles times 0.75. 4. The foreman on the Jackson job wonders what the actual direct materials cost was for that job.
Overtime Allocation Arlin Fabrication Company produces tools on a job order basis. During May, two jobs were completed, and the following costs were incurred: Other factory costs for the month totaled 16,800. Factory over-head costs are allocated one-third to Job 401 and two-thirds to Job 402. a. Describe two alternative methods for assigning the overtime premium cost to Jobs 401 and 402 and explain how the appropriate method would be determined. b. Compute the cost of Jobs 401 and 402 under each of the two methods described in part a.
A company has the following transactions during the week. Purchase of $1,000 raw materials inventory Assignment of $500 of raw materials inventory to Job 5 Payroll for 20 hours with $1,000 assigned to Job 5 Factory utility bills of $750 Overhead applied at the rate of $10 per hour What is the cost assigned to Job 5 at the end of the week?
During August, Skyler Company worked on three jobs. Data relating to these three jobs follow: Overhead is assigned on the basis of direct labor hours at a rate of 2.30 per direct labor hour. During August, Jobs 39 and 40 were completed and transferred to Finished Goods Inventory. Job 40 was sold by the end of the month. Job 41 was the only unfinished job at the end of the month. Required: 1. Calculate the per-unit cost of Jobs 39 and 40. (Round unit costs to nearest cent.) 2. Compute the ending balance in the work-in-process inventory account. 3. Prepare the journal entries reflecting the completion of Jobs 39 and 40 and the sale of Job 40. The selling price is 140 percent of cost.
Terrills Transmissions uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows: The following transactions were completed during November: a. Materials purchases on account during the month, 74,000. b. Materials requisitioned during the month: 1. Direct materials, 57,000. 2. Indirect materials, 11,000. c. Direct materials returned by factory to storeroom during the month, 1,100. d. Materials returned to vendors during the month prior to payment, 2,500. e. Payments to vendors during the month, 68,500. Required: 1. Prepare general journal entries for each of the transactions. 2. Post the general journal entries to T-accounts. 3. Balance the accounts and report the balances of November 30 for the following: a. Cash b. Materials c. Accounts Payable
During the month, Job AB2 used specialized machinery for 450 hours and incurred $500 in utilities on account, $300 in factory depreciation expense, and $100 in property tax on the factory. Prepare journal entries for the following: A. Record the expenses incurred. B. Record the allocation of overhead at the predetermined rate of $1.50 per machine hour.