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1. Management Accounting for Business Practical Cases on Job-order costing systems Dr. Mohamed A. Hamada Lecturer of Accounting Information Systems

2. ABX Company uses a normal job-order costing system. The company has two departments through which most jobs pass. Selected budgeted and actual data for the past year as follow:

3. During the year, several jobs were completed. Data pertaining to one such job, Job #10, follow:

4. ABX Company uses predetermined overhead rate to assign overhead to jobs. Direct labor hours (DLH) are used to compute the predetermined overhead rate. • Required • 1. Compute the predetermined overhead rate. POHR • 2. Using the predetermined rate, compute the per-unit manufacturing cost for Job #10. • 3. Recalculate the unit manufacturing cost for Job #10 using departmental overhead rates. Use direct labor hours for Department A and machine hours for Department B.

5. Estimated total manufacturingoverhead cost for the coming period POHR = Estimated total units in theallocation base for the coming period Solution The predetermined overhead rate Budgeted overhead = 100000 A + 500000 B = 600000\$

6. 2- compute the per-unit manufacturing cost for Job #10. *Direct labor = 5000 DLH *6\$ (DEP. A ) + 1000 DLH * 6\$ (Dep. B) 30000+6000 Overhead = Rate (10\$ ) * DLH (5000+1000)= 60000 \$

7. Estimated total manufacturingoverhead cost for the coming period POHR = Estimated total units in theallocation base for the coming period 3-Recalculate the unit manufacturing cost for Job #10 Use direct labor hours for Department A and machine hours for Department B • POHR (A) = . The predetermined rate for Department A is \$100,000/50,000 = \$2 per DLH. 50,000 Expected direct labor hours for A

8. Estimated total manufacturingoverhead cost for the coming period POHR = Estimated total units in theallocation base for the coming period • POHR (B) = • The predetermined rate for Department B is \$500,000/50,000 = \$10 per MHr. - 50,000 Expected machine hours for B

9. cost for Job #10 *Direct labor = 5000 DLH *6\$ (DEP. A ) + 1000 DLH * 6\$ (Dep. B) 30000+6000 Overhead Dep. A = Rate 2 * 5000 DLH for A Dep. B = Rate 10 * 1200 DMH for B

10. Case 2 • AZ, Inc., designs and builds projects for individual customers. On August 1, there were two jobs in process: Job #614 with a beginning balance of \$10,200; and Job 615 with a beginning balance of \$9,670. AZ applies overhead at the rate of 60 percent of direct labor cost. • During August, Jobs #616 and #617 were started. Data on August costs for all jobs are as follows:

11. During August, Jobs #616 and #617 were started. Data on August costs for all jobs are as follows: Required 1. Prepare job-order cost sheets for each job as of the end of August

12. Solution