Assignment
Ekpro Products manufactures containment chambers for environmentally friendly incinerators. Each chamber is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is the job cost sheet for an incinerator manufactured for Benzate Corporation:
|
Ekpro
|
Job Cost Sheet
|
|
Job:
|
Benzate
|
|
|
|
|
|
|
|
|
|
|
|
Direct Labor
|
Direct Material
|
Applied Overhead
|
Total
|
|
Hours
|
Rate
|
Total
|
Qty
|
Cost Per Unit
|
Total
|
Qty
|
Rate
|
Total
|
|
May 8, 20X7
|
|
|
|
|
|
|
|
|
|
|
|
Rod Burner
|
9
|
$25
|
$ 225
|
|
|
|
|
|
|
$ 225
|
|
Sandy Sharp
|
|
1
|
$12
|
$ 12
|
|
|
|
|
|
|
$ 12
|
|
Steel
|
|
|
|
|
10
|
$ 80
|
$ 800
|
|
|
|
$ 800
|
|
May 9, 20X7
|
|
|
|
|
|
|
|
|
|
|
|
Sandy Sharp
|
|
2
|
$12
|
$ 24
|
|
|
|
|
|
|
$ 24
|
|
Applied Overhead
|
|
|
|
|
|
|
?
|
?
|
$ 360
|
$ 360
|
|
|
|
12
|
|
$ 261
|
|
|
$ 800
|
|
|
$ 360
|
$1,421
|
(a) What types of costs do you imagine would be included in factory overhead? If overhead is applied based on direct labor hours, what is the application rate?
(b) Ekpro is considering installation of a robotic machine that will do all welding operations. How might this decision impact the total overhead and the application method?
(c) How does the applied overhead relate to the actual overhead? When they are not the same, what happens to the difference? Why is actual overhead not assigned to each job?