Management Accounting

Management Accounting

sheSaidYes Inc. is specialized in producing and selling engagement rings to young couples and uses Job Order Costing. Company uses Direct Labor hours to allocate Indirect Costs to jobs through predetermined allocation rate. According to budget of year 20X6, $100 000 indirect costs will be incurred and 5000 direct labor hours will be employed. Company pays $20/hour for Direct Labor. For Order 227, Direct Materials of $380 were used and 3.5 hours of Direct Labor employed. What was cost of Order 227 according to current Job Order Costing and, if actual indirect costs for whole year amounted to $150 000, how much cost was under- or over-allocated to Order 227?