Sherborn Construction, Inc. is a home builder in Arizona. Sherborn uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction Overhead. The company applies overhead based on estimated direct labor costs. For the year, it estimated construction overhead of $1,350,000 and total direct labor cost of $2,700,000. The following events occurred during August: (Click the icon to view the events.) Read the requirements. Requirement 1. Calculate Sherborn's predetermined overhead allocation rate for the year. House 402 House 403 House 404 House 405 a. Purchased materials on account, $480,000 b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned. Direct Materials Direct Labor $ 57,000 $ 67,000 66,000 87,000 = 49,000 37,000 55,000 53,000 Predetermined overhead allocation rate g. Houses completed: 402, 404 h. House sold on account: 404 for $230,000 c. The company incurred total wages of $300,000. Use the data from Item b to assign the wages. Wages are not yet paid. d. Depreciation of construction equipment, $6,400 e. Other overhead costs incurred: Equipment rentals paid in cash, $32,000; Worker liability insurance expired, $4,000. f. Allocated overhead to jobs.

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing …

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In compari…