Bigears Telco Ltd manufactures custom timber furniture. The company uses a job costing system. The following data
Question:
Bigears Telco Ltd manufactures custom timber furniture. The company uses a job costing system. The following data refers to the company for the month of March 2014:
· Overhead is applied to production using an annual predetermined overhead rate using direct labour hours.
· The budgeted overhead for the current year is $1,024,800.
· Budgeted direct labour cost for the current year is $640,500. The direct labour rate is $15 per hour.
· Costs incurred during March:
Direct labour costs $64,500
Indirect labour $8,000
Depreciation on factory building $35,000
Electricity $25,000
Factory rent $12,000
Other overhead costs $10,000
· Sales revenue from the jobs was $180,000. The company prices jobs at manufacturing cost plus 25 percent.
Required:
Complete the T- accounts providing the amounts of a) to p) to show the flow of costs through the company’s manufacturing accounts.
