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Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead

Job Costs Using Activity-Based Costing

Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows:

ActivityCost   DriverAmount of Driver
Materials handling$ 72,000     Number of moves3,000   
Engineering165,000     Number of change orders10,000   
Other overhead280,000     Direct labor hours50,000   

Heitger worked on four jobs in July. Data are as follows:

Job 13-43Job 13-44Job 13-45Job 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 13-43Job 13-44Job 13-45Job 13-46
Number of moves4452295
Number of change orders30402020
Direct labor hours9001,0001,600120

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$72,000/3,000$24
Engineering rate$165,000/10,000$16.50
Other overhead rate$280,000/50,000$5.60

2. Prepare job-order cost sheets for each job showing all costs through July 31.

If an amount is zero, enter “0”.

Job 13-43Job 13-44Job 13-45Job 13-46
Balance, July 1$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
Materials handling1,0561,248696120
Engineering495660330330
Other overhead5,0405,6008,960672
Total$51,391$56,208$56,986$13,322

3. Calculate the balance in Work in Process on July 31. ___________

$70,308

 (Job 13-45 + Job 13-46)

4. Calculate the cost of goods sold for July.______________

$107,599

(Job 13-43 + Job 13-44)

5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46?

$300 Lower

How would the cost of the other jobs be affected?

No effect

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