Question
Custom Luxury Yatchs (CLY) makes three different styles of personal yachts: Baja; Saria; and Terra. Given that each yacht is significantly different from the others,
Custom Luxury Yatchs (CLY) makes three different styles of personal yachts: Baja; Saria; and Terra. Given that each yacht is significantly different from the others, the company utilizes a job-order costing system to allocate costs to different jobs. CLYs CEO, Sarah, decided that given the process for making the customized yachts was fairly labour intensive, that they would use direct labour hours as the basis for overhead allocation. In December, 2017, Jessica, the controller, estimated the following amounts for the year 2018:
Direct material |
| $22,265,000 |
Direct Labour |
| $198,000,000 |
Overhead |
| $110,000,000 |
|
|
|
Construction Labour Hours (DL) |
| 625,000 |
Jessica recorded the following actual direct material and direct labour hours for the only three yachts started and completed during the last quarter of 2016:
| Baja | Saria | Terra |
Direct Material | $12,500,000 | $8,500,000 | $15,000,000 |
Construction Labour Hours | 62,000 | 50,000 | 68,000 |
Required
- Compute the cost of each job using the current system of cost allocation (around to the nearest full dollar).
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