Reference no: EM132602120
Question - Tin Tin Company (Tin Tin) uses a job-order costing system to record and track the costs of its decorating projects. It provided the following information of the decorating projects in January 20x8:
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Project 667
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Project 668
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Project 669
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Direct labor-hours
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240
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360
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300
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Machine-hours
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100
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120
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160
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Direct materials cost
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$164,000
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$108,000
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$220,000
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Direct labor cost
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$120,000
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$180,000
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$150,000
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There was no work in process at the beginning of January 20x8. Actual overhead costs among these three projects were $13,650 for January 20x8.
Tin Tin computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of year 20x8, it estimated that its total overhead for the year would be $820,000, the total direct labor cost for the year would be $6,000,000, and the company would work a total of 41,000 direct labor-hours and 24,000 machine-hours on all projects.
Project 668 and Project 669 were completed successfully in January 20x8, while Project 667 was completed on 25 February 20x8.
Required -
a) Compute the predetermined overhead rate that was in use during year 20x8.
b) Compute the amount of overhead cost that would have been charged to each project during January 20x8.
c) Determine the balance in the Overhead account at the end of January 20x8. What is this balance called?
d) Based on the answer of part (c), allocate the balance of Overhead account to Project 667, 668 and 669.
e) Explain why Tin Tin Company could not assign actual overhead costs to different jobs.
f) Make a T-account of Work in Process for Project 667, record all the transactions occurred during January 20x8 and determine the ending balance at the end of January 20x8.
g) Justify why Tin Tin Company should adopt job-order costing rather than process costing.