three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost Driver Amount of Driver Materials handling $ 72,000 Number of moves 3,000 Engineering 165,000 Number of change orders 10,000 Other overhead 280,000 Direct labor hours 50,000 Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44 Job 13-45 Job 13-46 Beginning balance $20,300 $19,800 $2,300 $0 Direct materials $6,500 $8,900 $12,700 $9,800 Direct labor cost $18,000 $20,000 $32,000 $2,400
Process Costing
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
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 is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC 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 comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Heitger Company is a job-order costing firm that uses activity-based costing to apply
| Activity | Cost | Driver | Amount of Driver | |
| Materials handling | $ 72,000 | Number of moves | 3,000 | |
| Engineering | 165,000 | Number of change orders | 10,000 | |
| Other overhead | 280,000 | Direct labor hours | 50,000 |
Heitger worked on four jobs in July. Data are as follows:
| Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |
| Beginning balance | $20,300 | $19,800 | $2,300 | $0 |
| Direct materials | $6,500 | $8,900 | $12,700 | $9,800 |
| Direct labor cost | $18,000 | $20,000 | $32,000 | $2,400 |
| Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |
| Number of moves | 44 | 52 | 29 | 5 |
| Number of change orders | 30 | 40 | 20 | 20 |
| Direct labor hours | 900 | 1,000 | 1,600 | 120 |
By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.
Required:
1. Calculate the activity rates for each of the three overhead activities. Round all activity rates to the nearest cent.
| Materials handling rate | $fill in the blank 9d5ff300206c04d_1 per move |
| Engineering rate | $fill in the blank 9d5ff300206c04d_2 per change order |
| Other overhead rate | $fill in the blank 9d5ff300206c04d_3 per direct labor hour |
2. Prepare job-order cost sheets for each job showing all costs through July 31.
If an amount is zero, enter "0".
| Heitger Company | ||||
| Job-Order Cost Sheets | ||||
| Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |
| Balance, July 1 | $fill in the blank 65347b001054ff6_1 | $fill in the blank 65347b001054ff6_2 | $fill in the blank 65347b001054ff6_3 | $fill in the blank 65347b001054ff6_4 |
| Direct materials | fill in the blank 65347b001054ff6_5 | fill in the blank 65347b001054ff6_6 | fill in the blank 65347b001054ff6_7 | fill in the blank 65347b001054ff6_8 |
| Direct labor cost | fill in the blank 65347b001054ff6_9 | fill in the blank 65347b001054ff6_10 | fill in the blank 65347b001054ff6_11 | fill in the blank 65347b001054ff6_12 |
| Materials handling | fill in the blank 65347b001054ff6_13 | fill in the blank 65347b001054ff6_14 | fill in the blank 65347b001054ff6_15 | fill in the blank 65347b001054ff6_16 |
| Engineering | fill in the blank 65347b001054ff6_17 | fill in the blank 65347b001054ff6_18 | fill in the blank 65347b001054ff6_19 | fill in the blank 65347b001054ff6_20 |
| Other overhead | fill in the blank 65347b001054ff6_21 | fill in the blank 65347b001054ff6_22 | fill in the blank 65347b001054ff6_23 | fill in the blank 65347b001054ff6_24 |
| Total | $fill in the blank 65347b001054ff6_25 | $fill in the blank 65347b001054ff6_26 | $fill in the blank 65347b001054ff6_27 | $fill in the blank 65347b001054ff6_28 |
3. Calculate the balance in Work in Process on July 31.
$fill in the blank b6599f098fe606e_1
4. Calculate the cost of goods sold for July.
$fill in the blank b6599f098fe606e_2
5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46?
$fill in the blank b6599f098fe606e_3
How would the cost of the other jobs be affected?
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