Emerson Associates (EA) provides market analysis services for clients. Consultants contract with clients to perform jobs...
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Emerson Associates (EA) provides market analysis services for clients. Consultants contract with clients to perform jobs for predetermined fees. All jobs feature the work of one professional consultant, and some larger jobs include additional support labor. Because of this, EA's normal-costing system includes two direct cost pools, professional labor and support labor, and one indirect cost pool, overhead. EA charges $80/hour to jobs for professional labor and charges $50/hour for support labor. Overhead is applied to jobs at a rate of $30 per labor-hour, whether professional or support. This rate was determined based on an annual estimated overhead cost of $600,000 and estimated labor-hours of 20,000 (10,000 professional hours and 10,000 support hours). Actual overhead in May was $50,000. EA tracks job costs in an account titled Jobs in Process (JIP). When the job is completed, costs are closed out to Cost of Completed Jobs (COCJ). Following is cost information for May 2020: From Beginning JIP Support Labor Incurred in May Support Labor Hrs. Client Professional Overhead Professional Labor Hrs. Labor Allocated Peterson Products $40,000 $22,000 $28,200 140 hrs. 150 hrs. Jacobson, Inc. Best Foods $ 4,500 $12,000 600 hrs. 450 hrs. 360 hrs. As of May 1, there were two jobs in progress: Peterson Products and Jacobson, Inc.. The job for Best Foods was started and completed in May. Required 1. Calculate JIP at the end of May. 2. Calculate COCJ for May. 3. Calculate under- or overallocated overhead in May. 4. Calculate the ending balances in JIP and COCJ if the under- or overallocated overhead amount is prorated based on the ending balances (before proration) in JIP and COCJ. 5. Ann Baker, the controller of Emerson Associates, is concerned about the validity of allocating overhead equally for professional and support hours. She believes that overhead related to professional labor is approximately twice as costly as overhead related to support labor. Calculate new overhead rates per professional labor-hour and per support labor-hour that would address this issue. How would the cost of the Best Foods job be affected by this change? (Ignore the <> impact of under- or overallocated overhead.) Emerson Associates (EA) provides market analysis services for clients. Consultants contract with clients to perform jobs for predetermined fees. All jobs feature the work of one professional consultant, and some larger jobs include additional support labor. Because of this, EA's normal-costing system includes two direct cost pools, professional labor and support labor, and one indirect cost pool, overhead. EA charges $80/hour to jobs for professional labor and charges $50/hour for support labor. Overhead is applied to jobs at a rate of $30 per labor-hour, whether professional or support. This rate was determined based on an annual estimated overhead cost of $600,000 and estimated labor-hours of 20,000 (10,000 professional hours and 10,000 support hours). Actual overhead in May was $50,000. EA tracks job costs in an account titled Jobs in Process (JIP). When the job is completed, costs are closed out to Cost of Completed Jobs (COCJ). Following is cost information for May 2020: From Beginning JIP Support Labor Incurred in May Support Labor Hrs. Client Professional Overhead Professional Labor Hrs. Labor Allocated Peterson Products $40,000 $22,000 $28,200 140 hrs. 150 hrs. Jacobson, Inc. Best Foods $ 4,500 $12,000 600 hrs. 450 hrs. 360 hrs. As of May 1, there were two jobs in progress: Peterson Products and Jacobson, Inc.. The job for Best Foods was started and completed in May. Required 1. Calculate JIP at the end of May. 2. Calculate COCJ for May. 3. Calculate under- or overallocated overhead in May. 4. Calculate the ending balances in JIP and COCJ if the under- or overallocated overhead amount is prorated based on the ending balances (before proration) in JIP and COCJ. 5. Ann Baker, the controller of Emerson Associates, is concerned about the validity of allocating overhead equally for professional and support hours. She believes that overhead related to professional labor is approximately twice as costly as overhead related to support labor. Calculate new overhead rates per professional labor-hour and per support labor-hour that would address this issue. How would the cost of the Best Foods job be affected by this change? (Ignore the <> impact of under- or overallocated overhead.)
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1 JIP Jobs in Process at the end of May It is given that only the best foods job is completed in May therefore Peterson Products and Jacobson Inc are ... View the full answer
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