At The End Of April, Cavy Company Completed Job 766 And 7

14 At The End Of April Cavy Company Had Completed Job 766 And 765 J

At the end of April, Cavy Company had completed Job 766 and 765. Job 766 is for 675 units, and Job 765 is for 900 units. According to the individual job cost sheets, the information provided includes direct materials, direct labor, and machine hours for each job. The data are as follows:

  • Job 765:
    • Direct Materials: $5,670
    • Direct Labor: $3,500
    • Machine Hours: 27
  • Job 766:
    • Direct Materials: $8,900
    • Direct Labor: $4,775
    • Machine Hours: 44

Job 765 produced 152 units, and Job 766 consisted of 250 units. The predetermined overhead rate is applied based on machine hours at a rate of $200 per hour. The objectives are to determine the (a) balance on the job cost sheets for each job, and (b) the cost per unit at the end of April.

Paper For Above instruction

The analysis of job costing for Cavy Company requires a detailed application of manufacturing costs associated with each specific job, incorporating direct materials, direct labor, and overhead costs. The primary goal is to correctly accumulate and allocate costs, accordingly computing the total costs for each job and the unit cost based on complete data. This comprehensive approach offers insights into manufacturing efficiency, cost management, and pricing strategies essential for maintaining profitability in a manufacturing setting.

Calculation of Job Cost Sheets Balances

To determine the total costs on each job's cost sheet, we need to combine direct material costs, direct labor costs, and applied manufacturing overhead. The direct materials and direct labor costs are directly provided, while manufacturing overhead is applied based on machine hours at a rate of $200 per hour.

Job 765

  • Direct Materials: $5,670
  • Direct Labor: $3,500
  • Machine Hours: 27
  • Manufacturing Overhead (Applied): 27 hours × $200/hour = $5,400
  • Total Job Cost: $5,670 + $3,500 + $5,400 = $14,570

Job 766

  • Direct Materials: $8,900
  • Direct Labor: $4,775
  • Machine Hours: 44
  • Manufacturing Overhead (Applied): 44 hours × $200/hour = $8,800
  • Total Job Cost: $8,900 + $4,775 + $8,800 = $22,475

Calculation of Cost Per Unit

The cost per unit is derived by dividing the total job cost by the number of units produced for each job. For Job 765, which produced 152 units, and Job 766, with 250 units, the calculations are as follows:

Job 765

  • Cost per unit: $14,570 / 152 units ≈ $95.86

Job 766

  • Cost per unit: $22,475 / 250 units = $89.90

Summary and Implications

The total costs assigned to each job reflect the sum of direct materials, direct labor, and applied manufacturing overhead, representing the full manufacturing expense associated with producing each product batch. Job 765's higher per-unit cost compared to Job 766 may suggest different levels of efficiency, complexity, or resource utilization. Understanding these cost structures is crucial for pricing strategies, cost control, and profitability analysis.

Additionally, the approach illustrates the importance of accurate cost allocation methods, like machine-hour-based overhead application, in manufacturing cost accounting. Properly assigned costs enable managers to evaluate job performance, forecast costs for future jobs, and make informed operational decisions that affect the company's competitiveness and financial health.

References

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