Problem: Analyzing costs in an engineering company. On June 1, Chu Engineering, which inspects cleanup of toxic spills and waste, had two jobs in process with the following costs incurred to date:
Direct Materials Direct Labor
City of X (name kept confidential) $1,000 $4,000
Missouri River Project 800 3,200
In addition, overhead is applied to these jobs at the rate of 100 percent of direct labor costs.
As of June 1, Chu had incurred direct materials costs as sown in table, mostly for laboratory testing materials.
During June, Chu completed both jobs and recorded them as Cost of Goods Sold.
The City of X job required no more direct materials in June but it did require $1,200 of direct labor to complete. The Missouri River Project job required $400 of direct materials and $2,000 of direct labor to complete.
Chu started a new job, Gulf States Project, during June and put $1,600 of direct labor costs onto this job and $400 of direct materials. The Gulf States Project has not been completed as of the end of June.
Provide the cost of direct materials, direct labor, and overhead (at 100 percent of direct labor cost) for the three jobs.