15. comparison of methods Ralph’s Job deals with a small custom fabricator of display cabinets.

The accounting system separately accumulates direct labor cost, direct material cost, and two overhead pools. The overhead pools are denoted, respectively, OVA and OVB. A recent reporting period begins with no work-in-process inventory. During the period three jobs

(a, b and

c) were worked on. The first two have been completed, and delivered to their customers while the third (job

c) remains partially complete at the end of the period. Various overhead and period costs incurred are as follows. (The data are scaled in what follows for presentation purposes.):

OVA OVB period hourly labor 2,000 1,000 1,000 salary labor 4,000 5,000 6,000 various materials 4,000 10,000 12,000 heat and light 8,000 1,000 depreciation 6,000 2,000 2,000 misc. 9,000 5,000 3,000 Direct labor and direct material activities are summarized as follows:

job a job b job c direct labor 2,200 2,500 3,500 direct material 1,800 5,000 4,000 In addition, the overhead LLAs are given by OVA = 22, 000 + 1.00 · DL$ and OVB = 20, 000+.50·DM$ (where DL$ denotes direct labor dollars and DM$ denotes direct material dollars).

(a) Suppose an actual, full costing system is used. Determine the unit cost of each job as well as the period’s cost of goods sold.

(b) Repeat

(a) for the case where a normal, full costing system is used. Assume respective normal volumes of DL$ = 10, 000 and DM$ = 10, 000 for the two overhead pools.

(c) Repeat

(a) for the case where normal, variable costing is used.