# Job Costing Problem: Lit*Up, Incorporated

Lit*Up, Inc., manufactures custom-made wrought-iron lighting fixtures for museum, gallery, and corporate settings.  The Company uses a normal job costing system.  The Company has two indirect cost pools:  indirect costs for iron-working (base is machine hours used) and indirect costs for finishing (base is direct labor cost).

For the current year, the Company has budgeted \$568,425.00 for indirect iron-working costs and \$411,250.00 for indirect finishing costs.  They also have budgeted direct labor costs to be 70,000 direct labor hours @ .50 per hour; plus 97,500 machine hours.

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Lit*Up worked on five jobs during the current period.  Jobs L-251 and L-343 were carried forward from the prior period, with beginning balances of \$23,000.00 and \$15,250.00 respectively.  Jobs L-453, L-520, and L-575 were begun in the current period.  Information for the current period appears below:

Direct materials issued in the current period to Jobs L-251, L-343, L-453, L-520, and L-575 were \$5,452.00; \$5,327.00; \$6,998.00; \$6,750.00; and \$5,522.00 respectively.  The jobs used 103; 112; 325; 330; and 264 direct labor hours respectively; the wage rate is \$24.00 per hour for all production employees currently.  The jobs used 200; 253; 492; 437; and 386 machine hours respectively.

For the current period, actual indirect iron-working costs were \$15,199.10; actual indirect finishing costs were \$3,027.56.

Jobs L-251 and L-343 were completed and sold during the current period; Job L-453 was completed but not sold; Jobs L-520 and L-575 are incomplete at the end of the current period.

REQUIREMENTS (use good format!):

1.Calculate the MOH allocation rates for both indirect cost pools.

2.Prepare a detailed schedule to show the ending balances in Work-In-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold.

3.For each indirect cost pool, determine whether Lit*Up is under- or over-allocated.

4.Calculate the under- or over-allocation adjustments using proration based on the amount of iron-working and finishing MOH included in account balances.

5.Prepare the journal entries necessary at year-end to adjust the allocations and to close the MOH accounts.

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