MNC provides customized engineering services to large manufacturing companies and uses a job-order costing system. The system
MNC provides customized engineering services to large manufacturing companies and uses a job-order costing system. The system provided the following information:
MNC purchases materials as needed and consumes them during the accounting period. Therefore, it does not need to maintain a materials inventory account. The payroll amount includes salaries/wages paid to professional (direct) labour as well as indirect labour. Overhead is allocated to jobs using a predetermined overhead allocation rate based on professional labour costs computed at the beginning of the year. For 2016, MNC estimated its professional labour and overhead amounts to be $3 million and $960,000 respectively.
1. Compute the predetermined overhead allocation rate for the year.
2. Compute the following amounts for the month of July:
a. Cost of jobs completed.
b. Gross profit.
c. Net income.
Step by Step Answer: