Reference no: EM132524026

You are the cost accountant for Hobbs Company. Your company does custom motorcycle work and uses a job order cost system. Hobbs sends detailed job cost sheets to its customers, along with an invoice. The date materials were used, the cost of materials, and the hours and cost of labor are included in the job cost sheet. A predetermined overhead application rate is adopted, and the total overhead applied is also included. Anh Tuan Vu is a customer who recently had custom frames installed. He included a letter accompanying his check in payment for the work done. He thanked the company for including the detailed cost information but inquired why overhead was estimated. He asserted that he would be enthusiastic about knowing exactlv what costs were included in overhead, and he thought that order customers would. too.

Instructions:

Question 1: Prepare letter to Mr. Anh Vu (address: R. O1.307, International University, School of Business, Quarter 6, Linh Trung Ward, Thu Duc District, HCMC, 700000) and tell him why you did not send him information on exact costs of overhead included in his job. Respond to his suggestion that you provide this information.