Managerial Accounting
ACCT – 2210
Assignment 3
Name: ID:
Question 1:
Lakeland Heating & Cooling installs and services commercial heating and cooling systems.
Lakeland uses job costing to calculate the cost of its jobs. Overhead is allocated to each job
based on the number of direct labour hours spent on that job. At the beginning of the current
year, Lakeland estimated that its overhead for the coming year would be $60,000. It also
anticipated using 5,000 direct labour hours for the year. In November, Lakeland started and
completed the following two jobs:
Job 101 Job 102
Direct materials used $17,500 $11,000
...........................
Direct labour hours used 105 90
....................
Lakeland paid a $21-per-hour wage rate to the employees who worked on these two jobs.
Requirements
1. What is Lakeland’s predetermined overhead rate based on direct labour hours?
2. Calculate the overhead to be allocated based on direct labour hours to each of the two
jobs.
3. What is the total cost of Job 101? What is the total cost of Job 102?
1
Managerial Accounting
ACCT – 2210
Question 2:
The following transactions were incurred by French Fabricators during January, the first month
of its fiscal year.
a. $180,000 of materials were purchased on account.
b. $173,000 of materials were used in production; of this amount, $151,000 were used on
specific jobs.
c. Manufacturing labour and salaries for the month totalled $225,000. A total of $195,000
were direct labor, while the remainder was indirect labour used in the factory.
d. The company recorded $20,000 of depreciation on the plant and plant equipment. The
company also received a plant utility bill for $15,000.
e. $85,000 of manufacturing overhead was allocated to specific jobs.
Requirements
1. Record the proper journal entry for each transaction.
2. By the end of January, was manufacturing overhead overallocated or
underallocated? By how much?
