Jurassic Manufacturing Inc., located in Flint, Michigan, produces custom stone tools. On the afternoon of April 20, 2024, a dog wondered onto Jurassic's factory floor and bit off the lower right-hand corner of the completed job cost sheet for Job 1302, an order of custom stone tools for the Bedrock Company.
Because Jurassic still maintains a manual accounting system, using paper-bound journals, ledgers and paper job cost sheets, none of this information could be replicated from computer records. While Fred, the owner of Jurassic Manufacturing Inc., is considered to be "technologically challenged," he is nevertheless one of the first individuals in his industry to use a tablet (it was a hammer and chisel).
As all other organizations now use computerized accounting systems, Fred could not find a CPA who understands how a manual accounting system operates. Fred was told by a colleague that you have excellent cost accounting and analytic skills and are attending a school with one of the best accounting programs in the region. He has asked you to replicate, lost information from the job cost sheet.
As Jurassic Manufacturing uses cost-plus pricing to determine revenue on its custom orders, it is crucial that they can promptly recreate the information contained on the job cost sheet.
Upon beginning the engagement, you requested job cost sheets from recent, previous jobs. Jurassic provided you with the completed job cost sheet from Job 1301, below:
The customer, Barney Company was billed $750 for the job.
You were able to ascertain the following additional information:
For the year 2024, budgeted annual MOH cost was $100,000, budgeted direct labor hour usage was 2,080 hours and budgeted direct labor cost was $200,000. Because Jurassic Manufacturing has no machines, it does not use machine hours to apply MOH.
Fred was the only employee who worked on these jobs, 1301 and 1302.
Jurassic uses cost-plus pricing and has a policy of maintaining a consistent markup percentage on all completed jobs.
Below are the remains of job 1302's completed job cost sheet.
Required:
a. Does Jurassic use an actual costing system or a normal costing system. How can this be determined? Why is the particular system chosen by Jurassic, important, given the nature of their business?
b. What does Jurassic use as a cost driver to apply MOH cost? How can you determine this? What was Jurassic's budgeted MOH rate for the year.
c. Assuming that both jobs were completed by one employee, Fred. What is Fred's hourly wage rate? How can this be ascertained?
d. How much direct labor cost was charged to job 1302?e. How much MOH cost was applied to job 1302?
f. What was the total cost of job 1302?
g. What is Jurassic's markup percentage? How can this be ascertained?
h. How much was the Bedrock Company billed for this job?
i. What can Jurassic do to prevent this issue from recurring?

Question

Jurassic Manufacturing Inc., located in Flint, Michigan, produces custom stone tools. On the afternoon of April 20, 2024, a dog wondered onto Jurassic's factory floor and bit off the lower right-hand corner of the completed job cost sheet for Job 1302, an order of custom stone tools for the Bedrock Company.
Because Jurassic still maintains a manual accounting system, using paper-bound journals, ledgers and paper job cost sheets, none of this information could be replicated from computer records. While Fred, the owner of Jurassic Manufacturing Inc., is considered to be "technologically challenged," he is nevertheless one of the first individuals in his industry to use a tablet (it was a hammer and chisel).
As all other organizations now use computerized accounting systems, Fred could not find a CPA who understands how a manual accounting system operates. Fred was told by a colleague that you have excellent cost accounting and analytic skills and are attending a school with one of the best accounting programs in the region. He has asked you to replicate, lost information from the job cost sheet.
As Jurassic Manufacturing uses cost-plus pricing to determine revenue on its custom orders, it is crucial that they can promptly recreate the information contained on the job cost sheet.
Upon beginning the engagement, you requested job cost sheets from recent, previous jobs. Jurassic provided you with the completed job cost sheet from Job 1301, below:
  The customer, Barney Company was billed $750 for the job.
You were able to ascertain the following additional information:
For the year 2024, budgeted annual MOH cost was $100,000, budgeted direct labor hour usage was 2,080 hours and budgeted direct labor cost was $200,000. Because Jurassic Manufacturing has no machines, it does not use machine hours to apply MOH.
Fred was the only employee who worked on these jobs, 1301 and 1302.
Jurassic uses cost-plus pricing and has a policy of maintaining a consistent markup percentage on all completed jobs.
Below are the remains of job 1302's completed job cost sheet.
  Required:
a. Does Jurassic use an actual costing system or a normal costing system. How can this be determined? Why is the particular system chosen by Jurassic, important, given the nature of their business?
b. What does Jurassic use as a cost driver to apply MOH cost? How can you determine this? What was Jurassic's budgeted MOH rate for the year.
c. Assuming that both jobs were completed by one employee, Fred. What is Fred's hourly wage rate? How can this be ascertained?
d. How much direct labor cost was charged to job 1302?e. How much MOH cost was applied to job 1302?
f. What was the total cost of job 1302?
g. What is Jurassic's markup percentage? How can this be ascertained?
h. How much was the Bedrock Company billed for this job?
i. What can Jurassic do to prevent this issue from recurring?

Quizplus · Accepted Answer

The Answer of Jurassic Manufacturing Inc., located in Flint, Michigan, produces custom stone tools. On the afternoon of April 20, 2024, a dog wondered onto Jurassic's factory floor and bit off the lower right-hand corner of the completed job cost sheet for Job 1302, an order of custom stone tools for the Bedrock Company.
Because Jurassic still maintains a manual accounting system, using paper-bound journals, ledgers and paper job cost sheets, none of this information could be replicated from computer records. While Fred, the owner of Jurassic Manufacturing Inc., is considered to be "technologically challenged," he is nevertheless one of the first individuals in his industry to use a tablet (it was a hammer and chisel).
As all other organizations now use computerized accounting systems, Fred could not find a CPA who understands how a manual accounting system operates. Fred was told by a colleague that you have excellent cost accounting and analytic skills and are attending a school with one of the best accounting programs in the region. He has asked you to replicate, lost information from the job cost sheet.
As Jurassic Manufacturing uses cost-plus pricing to determine revenue on its custom orders, it is crucial that they can promptly recreate the information contained on the job cost sheet.
Upon beginning the engagement, you requested job cost sheets from recent, previous jobs. Jurassic provided you with the completed job cost sheet from Job 1301, below:
  The customer, Barney Company was billed $750 for the job.
You were able to ascertain the following additional information:
For the year 2024, budgeted annual MOH cost was $100,000, budgeted direct labor hour usage was 2,080 hours and budgeted direct labor cost was $200,000. Because Jurassic Manufacturing has no machines, it does not use machine hours to apply MOH.
Fred was the only employee who worked on these jobs, 1301 and 1302.
Jurassic uses cost-plus pricing and has a policy of maintaining a consistent markup percentage on all completed jobs.
Below are the remains of job 1302's completed job cost sheet.
  Required:
a. Does Jurassic use an actual costing system or a normal costing system. How can this be determined? Why is the particular system chosen by Jurassic, important, given the nature of their business?
b. What does Jurassic use as a cost driver to apply MOH cost? How can you determine this? What was Jurassic's budgeted MOH rate for the year.
c. Assuming that both jobs were completed by one employee, Fred. What is Fred's hourly wage rate? How can this be ascertained?
d. How much direct labor cost was charged to job 1302?e. How much MOH cost was applied to job 1302?
f. What was the total cost of job 1302?
g. What is Jurassic's markup percentage? How can this be ascertained?
h. How much was the Bedrock Company billed for this job?
i. What can Jurassic do to prevent this issue from recurring?