Ace Company_Job order costing
IRAC Explanation
July 3, 2020Construct models of the structure and function of amino acids and peptide bonds, predict ionization of an amino acid, and demonstrate peptide bond bre
July 3, 2020Ace Company_Job order costing
At the beginning of 2014, Ace Company estimated the following costs to produce one unit of product: 5 pounds of direct material costing $2 per pound; and, 1.5 hours of direct labor costing $12 per hour. Ace also estimated annual factory overhead totaling $400,000, and 10,000 direct labor hours to be worked during the year. Job lot #112, containing 400 identical units, was completed and sold during June of 2014. Job lot #112 required 2,050 pounds of direct material costing $4,050, and 620 hours of direct labor costing $7,800. At the end of 2014, Ace determined total factory overhead to have been $410,000, and direct labor hours worked to have been 9,800.
(a) What was the budgeted cost of job lot #112?
(b) What is the normal cost of job lot #112?
(c) What is the prime cost of job lot #112?
(d) What is the actual cost of job lot #112?
(e) Distinguish normal and actual cost?
(f) Prepare the adjusting entry needed to reconcile the difference between normal and actual cost related to job lot #112?
(g) Why was the adjusting entry needed?
