Simon Construction Company uses a job costing system. It applies overhead to jobs at a rate of 60 percent of direct labor cost. On August 1, the balance is the Work-in-Process Inventory account was $34,000. It had the following jobs in process on August 1
Job No.
______________________________
478 (irrigation project) $19,600
479 (parking lot construction) 9,400
480 (street repair) 5,000
Total ------------------------- $34,000
Selected transactions for the month of August follow:
1. Materials issued: Job 480, $800: Job 481, $4,200: Job 482 $2,500.
2. Simon assigned labor costs as follows: Job 478, $300; Job 479, $2,600: Job 480, $7,800; Job 481, $5,900; Job 482, $1,700.
3. It applies overhead for August to jobs using an overhead rate of 60 percent of direct labor costs. Actual overhead for the month was $12,000.
4. The company completed jobs 478 and 479 in August.
Simon Construction Company%u2019s management is concerned that costs are higher than anticipated. Managers had expected the cost of completed jobs to be as follows:
- Job 478: $20,000, when complete
- Job 479: $13,000, when complete
- Job 480: $15,000, as of August 31
- Job 481: $10,000, as of August 31
- Job 482: $4,000, as of August 31