Question

For fiscal year 2001, Lazlow Metalworks estimated it would incur total overhead costs of $$\$ 1,200,000$$ and work 40,000 machine hours. During January 2001, the company worked exclusively on one job, Job $=1211$. It incurred January costs as follows: $$ \begin{aligned} &\begin{array}{lrr} \text { Direct material usage } & & \$ 121,000 \\ \text { Direct labor (1,400 hours) } & & \\ \text { Manufacturing overhead: } & & \\ \quad \text { Rent } & \$ 11,200 & \\ \text { Utilities } & 15,200 & \\ \text { Insurance } & 32,100 & \\ \text { Labor } & 15,500 & \\ \text { Depreciation } & 23,700 & \\ \text { Maintenance } & 10,800 & \\ \quad \text { Total OH } & & 108,500 \end{array}\\ &\text { Machine hours worked in January: } 3,400 \end{aligned} $$ a. Assuming the company uses an actual cost system, compute the January costs assigned to Job $=1211$. b. Assuming the company uses a normal cost system, compute the January costs assigned to Job $=1211$. c. What is the major factor driving the difference between your answers in parts (a) and (b)?

   For fiscal year 2001, Lazlow Metalworks estimated it would incur total overhead costs of $$\$ 1,200,000$$ and work 40,000 machine hours. During January 2001, the company worked exclusively on one job, Job $=1211$. It incurred January costs as follows:
$$
\begin{aligned}
&\begin{array}{lrr}
\text { Direct material usage } & & \$ 121,000 \\
\text { Direct labor (1,400 hours) } & & \\
\text { Manufacturing overhead: } & & \\
\quad \text { Rent } & \$ 11,200 & \\
\text { Utilities } & 15,200 & \\
\text { Insurance } & 32,100 & \\
\text { Labor } & 15,500 & \\
\text { Depreciation } & 23,700 & \\
\text { Maintenance } & 10,800 & \\
\quad \text { Total OH } & & 108,500
\end{array}\\
&\text { Machine hours worked in January: } 3,400
\end{aligned}
$$
a. Assuming the company uses an actual cost system, compute the January costs assigned to Job $=1211$.
b. Assuming the company uses a normal cost system, compute the January costs assigned to Job $=1211$.
c. What is the major factor driving the difference between your answers in parts (a) and (b)?
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Cost Accounting: Traditions and Innovations
Cost Accounting: Traditions and Innovations
Jesse T. Barfield,… 4th Edition
Chapter 5, Problem 27 ↓

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Step 1

- Under the actual cost system, the costs assigned to a job include the actual direct materials, actual direct labor, and actual manufacturing overhead incurred. - Direct material cost for Job = 1211: \$121,000 - Direct labor cost is not provided directly, so we  Show more…

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For fiscal year 2001, Lazlow Metalworks estimated it would incur total overhead costs of $$\$ 1,200,000$$ and work 40,000 machine hours. During January 2001, the company worked exclusively on one job, Job $=1211$. It incurred January costs as follows: $$ \begin{aligned} &\begin{array}{lrr} \text { Direct material usage } & & \$ 121,000 \\ \text { Direct labor (1,400 hours) } & & \\ \text { Manufacturing overhead: } & & \\ \quad \text { Rent } & \$ 11,200 & \\ \text { Utilities } & 15,200 & \\ \text { Insurance } & 32,100 & \\ \text { Labor } & 15,500 & \\ \text { Depreciation } & 23,700 & \\ \text { Maintenance } & 10,800 & \\ \quad \text { Total OH } & & 108,500 \end{array}\\ &\text { Machine hours worked in January: } 3,400 \end{aligned} $$ a. Assuming the company uses an actual cost system, compute the January costs assigned to Job $=1211$. b. Assuming the company uses a normal cost system, compute the January costs assigned to Job $=1211$. c. What is the major factor driving the difference between your answers in parts (a) and (b)?
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