In job order costing, what is the direct labor cost incurred in June for Jobs 602, 603, and 604, given total direct labor of $800, $1,420, and $2,100 and that Job 602 had $180 of direct labor in May while Jobs 603 and 604 started in June?
Direct materials | $1,500 | $3,300 | $2,700
Direct labor | $800 | $1,420 | $2,100
Overhead applied | 400 | 710 | 1,050
Job 602 was started in May, and the following costs were assigned to it in May: direct materials, $600; direct labor, $180; and overhead, $90. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate as a percent of direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. The company’s predetermined overhead rate did not change over these months.
Job 602 direct labor in June is $800 − $180 = $620. Because Jobs 603 and 604 started in June, their June direct labor equals their total direct labor: %%DOLLAR%%1,420 and %%DOLLAR%%2,100. Total direct labor used in June is $620 + $1,420 + $2,100 = $4,140.
What you are being asked to find
You need the portion of each job’s total direct labor that happened specifically in June. The key detail is that Job 602 had some labor in May, while Jobs 603 and 604 did not.
Use the timing of when each job started
- Job 602 started in May, so its total direct labor ($800) is split between May and June.
- Jobs 603 and 604 started in June, so all of their direct labor was incurred in June.
Compute June direct labor for each job
Job 602
$$\text{June DL}_{602} = \text{Total DL}_{602} - \text{May DL}_{602} = 800 - 180 = 620$$
Job 603
Started in June, so: $$\text{June DL}_{603} = 1{,}420$$
Job 604
Started in June, so: $$\text{June DL}_{604} = 2{,}100$$
Total direct labor used in June
$$\text{Total June DL} = 620 + 1{,}420 + 2{,}100 = 4{,}140$$
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