Question: Vern s Van Service customizes light trucks according to customers orders

Vern’s Van Service customizes light trucks according to customers’ orders. This month the company worked on five jobs, numbered 207 through 211. Materials requisitions for the month were as follows:

An analysis of the payroll records revealed the following distribution for labor costs:

Other overhead costs (consisting of rent, depreciation, taxes, insurance, utilities, etc.) amounted to $3,600. At the beginning of the period, management anticipated that overhead cost would be $6,400 and total direct labor would amount to $5,000. Overhead is allocated on the basis of direct labor dollars.
Jobs 207 through 210 were finished during the month; Job 211 is still in process. Jobs 207 through 209 were picked up and paid for by customers. Job 210 is still on the lot waiting to be picked up.

A. Calculate the total cost for each job for this month.
B. Calculate the over-applied or under-applied overhead.
C. Suppose that a customer who has just started a catering service wants to customize her truck but has a limited budget for the job. Estimated paint, electronics, and materials for containers to keep food cold or warm amounts to $1,700. Direct labor is estimated to be $1,100. The customer’s budget is $3,000, but she is hoping that the delivery service will be successful so that she can order more trucks in the next several years. Calculate the minimum price that would be acceptable if there is ample capacity to accept thejob.
View Solution:

Sale on SolutionInn
  • CreatedJanuary 26, 2015
  • Files Included
Post your question