Question

Larry’s Lawn Services provides custom landscaping for homes and businesses and uses job order costing to capture the cost of its landscaping jobs. There are no jobs in process at the beginning of May. Listed below are data concerning the three landscaping jobs conducted during May.

Southside Oceanview Rocky Heights
Direct materials $5,450 $7,635 $6,480
Landscaper labor costs $4,810 $5,980 $5,525
Landscaper hours 74 92 85

Overhead costs are applied to jobs on the basis of landscaper hours, and the predetermined overhead rate is $60 per landscaper hour. The Southside job is the only incomplete job at the end of May. Actual overhead for the month was $15,400.

Instructions
(a) Determine the cost of each job.
(b) Indicate the balance of the Landscape Contracts in Process account at the end of May.

Answer 1

a. Cost for each job

Southside $ 14,700

Oceanview $ 19,135

Rocky Heights $ 17,105

b. Contracts in process end of May is only Southside with a in process value of $ 14,700

Step-by-step explanation:

Computation of cost per job

Southside Oceanview Rocky Heights Total

$ $ $ $

Direct Materials 5,450 7,635 6,480 19,565

Direct labor costs 4,810 5,980 5,525 16,315

Overhead costs 4,440 5,520 5,100 15,060

Total cost for each job 14,700 19,135 17,105

Direct labor hours per job are used to determine the overheads

No of hours 74 92 85

Predetermined Rate $ 60 $ 60 $ 60

Overhead costs $ 4,440 $ 5,520 $ 5,100