At The End Of April, Cavy Company Completed Job 766 A 879705

At The End Of April Cavy Company Had Completed Job 766 And 765 Job 7

At the end of April, Cavy Company had completed Job 766 and Job 765. Job 766 is for 675 units, and Job 765 is for 900 units. According to the individual job cost sheets, the information is as follows: Job 765 has direct materials costing $5,670 and direct labor costing $3,500, with 27 machine hours. Job 766 has direct materials costing $8,900 and direct labor costing $4,775, with 44 machine hours. 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.

Paper For Above instruction

In managerial accounting, understanding how to allocate manufacturing costs to specific jobs is essential for providing accurate product costing, profitability analysis, and informed managerial decision-making. The case of Cavy Company offers a practical scenario to explore cost accumulation, overhead application, and per-unit cost calculation, which are fundamental components of job order costing systems.

To determine the total costs assigned to each job, it is necessary first to compute the applied manufacturing overhead, which is calculated using the predetermined overhead rate. Since the rate is given as $200 per machine hour, multiplying this rate by the actual machine hours for each job yields the overhead applied.

For Job 765, the applied overhead is calculated as:

Overhead = Machine hours × Rate = 27 hours × $200 = $5,400

Similarly, for Job 766:

Overhead = 44 hours × $200 = $8,800

Next, the total cost for each job is the sum of direct materials, direct labor, and applied overhead.

For Job 765:

  • Direct Materials = $5,670
  • Direct Labor = $3,500
  • Applied Overhead = $5,400
  • Total Cost = $5,670 + $3,500 + $5,400 = $14,570

For Job 766:

  • Direct Materials = $8,900
  • Direct Labor = $4,775
  • Applied Overhead = $8,800
  • Total Cost = $8,900 + $4,775 + $8,800 = $22,475

The next step involves calculating the cost per unit for each job. This is achieved by dividing the total cost of each job by the number of units produced.

For Job 765:

  • Units Produced = 152
  • Cost per Unit = Total Cost / Units Produced = $14,570 / 152 ≈ $95.83

For Job 766:

  • Units Produced = 250
  • Cost per Unit = $22,475 / 250 = $89.90

In conclusion, the total accumulated costs on the job cost sheets for April are $14,570 for Job 765 and $22,475 for Job 766. The unit costs are approximately $95.83 for Job 765 and $89.90 for Job 766. These metrics provide valuable insights into the cost structure and profitability of each job, assisting management in pricing, budgeting, and cost control decisions. Such detailed costing methods affirm the importance of accurate cost allocation systems within manufacturing operations.

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