(Comprehensive) Birmingham Contractors uses a job order costing system. In May 2010, the company made a $3,300,000 bid to build a pedestrian overpass over the beach highway at Gulf Shores, Alabama. Birmingham Contractors won the bid and assigned #515 to the project. Its completion date was set at December 15, 2010. The following costs were estimated for completion of the overpass: $1,240,000 for direct material, $670,000 for direct labor, and $402,000 for overhead.
During July, work began on job #515; direct material cost assigned to Job #515was $121,800, and direct labor cost associated with it was $175,040. The firm uses a predetermined OH rate of 60 percent of direct labor cost. Birmingham Contractors also worked on several other jobs during July and incurred the following costs:
|
Direct material (including Job #515) issued |
$579,300 |
|
Direct labor (including Job #515) accrued |
584,000 |
|
Indirect labor accrued |
55,800 |
|
Administrative salaries and wages accrued |
39,600 |
|
Depreciation on construction equipment |
26,400 |
|
Depreciation on office equipment |
7,800 |
|
Client entertainment (on accounts payable) |
11,100 |
|
Advertising for firm (paid in cash) |
6,600 |
|
Indirect material (from supplies inventory) |
18,600 |
|
Miscellaneous expenses (design related; to be paid in the following month) |
10,200 |
|
Accrued utilities (for office, $1,800; for construction, $5,400) |
7,200 |
During July, Birmingham Contractors completed several jobs that had been in process before the beginning of the month. These completed jobs sold for $1,224,000 and payment will be made to the company in August. The related job cost sheets showed costs associated with those jobs of $829,000. At the beginning of July, Birmingham Contractors had Work in Process Inventory of $871,800.
a. Prepare a job order cost sheet for Job #515, including all job details, and post the appropriate cost information for July.
b. Prepare journal entries for the preceding information.
c. Prepare a Cost of Goods Manufactured Schedule for July for Birmingham Contractors.
d. Assuming that the company pays income tax at a 40 percent rate, prepare an income statement for Birmingham Contractors.