Exercise 15-12

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Don Lieberman and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November.

Lynn

Brian

Mike

Direct materials $610 $470 $280

Auditor labor costs $6,000 $7,600 $3,575

Auditor hours 74 91 49

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $55 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $13,800.

(a) Determine the cost of each job.

Cost

Lynn $Entry field with incorrect answer now contains modified data

3700

Brian $Entry field with incorrect answer

5005

Mike $Entry field with incorrect answer

2695

(b) Indicate the balance of the Service Contracts in Process account at the end of November.

Balance in service contracts in process account $Entry field with incorrect answer

13800

(c) Calculate the ending balance of the Operating Overhead account for November.

Balance in operating overhead account $Entry field with correct answer

2030

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