Question

Larry’s Lawn Services provides custom landscaping for homes and businesses and uses job order costing to capture the cost of its landscaping jobs. There are no jobs in process at the beginning of May. Listed below are data concerning the three landscaping jobs conducted during May.

Southside Oceanview Rocky Heights
Direct materials $5,450 $7,635 $6,480
Landscaper labor costs $4,810 $5,980 $5,525
Landscaper hours 74 92 85

Overhead costs are applied to jobs on the basis of landscaper hours, and the predetermined overhead rate is $60 per landscaper hour. The Southside job is the only incomplete job at the end of May. Actual overhead for the month was $15,400.

Instructions
(a) Determine the cost of each job.
(b) Indicate the balance of the Landscape Contracts in Process account at the end of May.

Answer 1

Answer:

a. Cost for each job

   Southside               $ 14,700

   Oceanview             $ 19,135

   Rocky Heights        $ 17,105

b. Contracts in process end of May is only Southside with a in process value of $ 14,700

   

Explanation:

Computation of cost per job

                                        Southside     Oceanview    Rocky Heights   Total

                                               $                     $                       $                  $

Direct Materials                 5,450              7,635                6,480         19,565

Direct labor costs              4,810               5,980               5,525          16,315

Overhead costs                 4,440              5,520              5,100           15,060

Total cost for each  job    14,700             19,135                17,105    

Direct labor hours per job are used to determine the overheads

No of hours                            74                    92                    85

Predetermined Rate            $ 60              $ 60                  $ 60

Overhead costs                   $ 4,440          $ 5,520           $ 5,100