Job Order Cost System

question 74

Essay

Job order cost system
Century Pools designs and builds custom pools and spas to the customer's order and uses a job order system.The predetermined overhead rate for the current year is 60% of direct labor cost.
At the end of the current year,Century Pools' direct labor cost totaled $170,000 and actual overhead amounted to $105,000.
A pool built for F.Becker required $32,000 of direct materials and $6,500 of direct labor.It was completed in May of the current year.
(a)Compute the total cost of the Becker pool as shown on the job cost sheet at date of completion.
(b)Compute the amount of under- or over-applied manufacturing overhead for Century's operations for the current year.
(c)What disposition is made of over- or under-applied overhead at the end of the year? (Assume that the amount is not material. )

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Definitions:

Quality

The standard of something as measured against other similar things; a degree or level of excellence.

Business Processes

A set of linked activities or tasks that, once completed, will accomplish an organizational goal.

Functional Departments

Different segments within a company specialized in certain operations or responsibilities such as finance, marketing, or R&D.

External Failure Costs

Costs that are incurred when a product or service that is defective is delivered to a customer.