Question: QUESTION 6: Job + ABC costing [30 marks] Tying the Knot, are a small wedding planning business located on the Sunshine Coast, Queensland, Australia. They
QUESTION 6: Job + ABC costing [30 marks]
Tying the Knot, are a small wedding planning business located on the Sunshine Coast, Queensland, Australia. They currently use a job costing system to manage and track the cost of the weddings they manage.
This month they are planning three weddings. Each Wedding is tracked using a unique customer ID number. The materials and labour that have been used for each wedding is outlined below.
| Cost Summary per Wedding | 4000 | 4001 | 4002 | Total |
| Direct Materials | $10 000 | $20 00 | $5 000 | $35 000 |
| Direct Labour | $1 200 | $25 000 | $ 800 | $27 000 |
The budgeted overhead cost for the year is $350 000 and it is to be allocated based on total labour dollars. The budgeted total labour for the year is $100 000.
Required:
- Based on the information provided, calculate the total cost of each wedding using the estimated overhead allocation rate. [5 marks].
- Actual overhead for the month amounted to $100 000. Close the over applied or under applied overhead to cost of sales. [2.5 marks].
- Wedding 4000 and 4001 were held in the month and paid for by the customer. Job 4002 is still being planning and due to be delivered next month. Review the journal entries prepared and identify four (4) errors and provide the correction. [ 10 marks]
Work-in-Process $ 35 000
Materials Inventory $ 35 000
Work-in-Process $ 20 000
Overhead Cost Control $7 000
Wages Payable $ 27 000
Work-in-Process $ 87 500
Overhead Cost Control $ 87 500
Overhead Cost Control $ 100 000
Various Accounts $ 100 000
Finished Goods $24 000
Work-in-Process $24 000
Jobs 4000 and 4002
Cost of sales $132 000
Finished Goods $132 000
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