Hi-Tek is a small software firm that builds and installs custom business applications for clients and uses
Question:
Hi-Tek is a small software firm that builds and installs custom business applications for clients and uses a job order costing system. The costs for each client are organized into two departments: Development and Implementation. The firm uses predetermined overhead rates to charge clients. At the beginning of the year, the following estimates were made:
The predetermined overhead rate in the Development department is based on programming hours; in the Implementation department it is based on consultant hours (but only those in the Implementation department). The cost for any particular job is based on direct consultant costs, materials and supplies, and an applied overhead cost. A job for client 1812 was completed with the following costs:
At the end of the year, the following were the actual hours expended and costs incurred for Hi-Tek.
Required
1. Calculate the predetermined overhead rates for the Development and Implementation departments.
2. Calculate the total cost of the job for client 1812.
3. Calculate whether the overhead for both departments was overapplied or underapplied.
Step by Step Answer:
Managerial Accounting
ISBN: 9780135443446
4th Canadian Edition
Authors: Karen Braun, Wendy Tietz, Louis Beaubien