Polebarn Construction Incorporated uses a job costing system. It applies overhead to jobs at a rate of 60 percent of direct labor cost. On November 1, the balance in the Work-in-Process Inventory account was $100,000. It had the following jobs in process on November 1:
Job No. Total
15............................................................................ $ 45,000
16............................................................................ 18,000
17............................................................................ 37,000
Total........................................................................ $100,000
Selected transactions for the month of November follow:
(1) Direct materials issued: Job 17, $23,000; Job 18, $15,500; Job 19, $29,000.
(2) Polebarn assigned direct labor costs as follows: Job 15, $13,000; Job 16, $8,500; Job 17, $10,500; Job 18, $26,000; Job 19, $34,500.
(3) It applies overhead for November to jobs using an overhead rate of 60 percent of direct labor costs. Actual overhead for the month was $70,352.
(4) It completed Jobs 15 and 16 in November. Polebarn Construction Inc.’s management is concerned that costs are higher than anticipated. Managers had expected the cost of completed jobs to be as follows:
Job 15: $70,000, when complete
Job 16: $30,000, when complete
Job 17: $60,000, as of November 30
Job 18: $60,000, as of November 30
Job 19: $80,000, as of November 30
Compare the actual job costs to management’s expected costs, and report your results.