Answered

Welcome to Westonci.ca, the place where your questions are answered by a community of knowledgeable contributors. Our Q&A platform offers a seamless experience for finding reliable answers from experts in various disciplines. Get quick and reliable solutions to your questions from a community of experienced experts on our platform.

Vince Melders, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated the following for the year :

Number of direct labor hours 6,560
Direct labor cost $59,040
Overhead cost $57,072

During the year, the following actual amounts were experienced :

Number of direct labor hours 6,150
Direct labor incurred $61,500
Overhead incurred $57,810

a. Should EcoScape use process costing or job-order costing?
b. If EcoScape uses a normal costing system and overhead is applied on the basis of direct labor hours, What is the overhead rate? (Round your answer to the nearest cent.)
c. What is the average actual wage rate?
d. What is the cost of an installation that takes $3,350 of direct materials and 30 direct labor hours?

Sagot :

anthougo

Answer:

EcoScape Company

a. EcoScape should use a job-order costing method because each job is different.

b. The overhead rate is $8.70.

c. The average actual wage rate is $10

d. The cost will be equal to  $3,911.

Explanation:

a) Data and Calculations:

                                                Estimated    Actual

Number of direct labor hours 6,560            6,150

Direct labor cost                 $59,040        $61,500

Overhead cost                    $57,072        $57,810

Overhead rate = $57,072/6,560 = $8.70

Average actual wage rate = $61,500/6,150 = $10

The cost of an installation that takes $3,350 of direct materials and 30 direct labor hours will be:

Direct materials  $3,350

Direct labor cost      300 (30 * $10)

Overhead cost         261 (30 * $8.70)

Total costs           $3,911

Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.