Job Costs Using Activity-Based Costing

Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows:

Activity	Cost		Driver	Amount of Driver
Materials handling	$56,250		Number of moves	2,500
Engineering	142,500		Number of change orders	9,500
Other overhead	209,100		Direct labor hours	51,000

Heitger worked on four jobs in July. Data are as follows:

	Job 13-43		Job 13-44		Job 13-45		Job 13-46
Beginning balance	$21,400		$19,400		$4,500		$0
Direct materials	$5,600		$9,700		$12,700		$9,600
Direct labor cost	$810		$990		$1,700		$110

	Job 13-43		Job 13-44		Job 13-45		Job 13-46
Number of moves	43		48		27		7
Number of change orders	32		44		24		15
Direct labor hours	810		990		1,700		110

By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.

Required:

1. Calculate the activity rates for each of the three overhead activities. Round all activity rates to the nearest cent.

Materials handling rate	$ per move
Engineering rate	$ per change order
Other overhead rate	$ per direct labor hour

Feedback

1. In job-order costing, departmental overhead rates and activity-based costing affect only the application of overhead which is put on the job-order costing sheet and must include all drivers for which overhead is applied.

2. Prepare job-order cost sheets for each job showing all costs through July 31.

When required, round your answers to the nearest dollar. If an amount is zero, enter "0".

Heitger Company
Job-Order Cost Sheets
	Job 13-43	Job 13-44	Job 13-45	Job 13-46
Balance, July 1	$	$	$	$
Direct materials
Direct labor cost
Materials handling
Engineering
Other overhead
Total	$	$	$	$

3. Calculate the balance in Work in Process on July 31. $

4. Calculate the cost of goods sold for July. $

5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46?

$ lower