Reference no: EM132844632

Problem - Jefferson Company, a commercial painting contractor, uses a normal-costing system to cost each job. Its job-costing system has two direct-cost categories (direct materials and direct labor) and one indirect-cost pool called overhead costs. To each job, Jefferson allocates overhead at a budgeted rate of 80% of direct labor costs.

Jefferson provides the additional information for February:

1. As of February 1, Job A21, the only job in process, had incurred direct material costs of $30,000 and direct labor costs of $50,000.

2. Jobs A22, A23, and A24 were started in February.

3. Direct materials used during February were $150,000.

4. Direct labor costs for February were $120,000.

5. Actual overhead costs for February were $102,000.

6. On February 28, Job A24 was the only job still in process, and it had incurred direct materials costs of $20,000 and direct labor costs of $40,000.

As each job is completed, its cost is transferred to the Cost of Jobs Billed account. Each month, Jefferson closes any under-or over-allocated overhead to Cost of Jobs Billed.

Required -

1. Give one example of a direct cost and one example of an overhead cost for a job undertaken by Jefferson Company.

2. Calculate the overhead allocated to Job A21 as of February 1.

3. Calculate the overhead allocated to Job A24 as of February 28.

4. Calculate the under- or overallocated overhead for February.

5. Calculate ending balance of jobs still in process as of February 28.

6. Compute the Cost of Jobs Billed for February.