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job costing for services the hillman company sells and services lawn mowers snow blo 666708

Job costing for services The Hillman Company sells and services lawn mowers, snow blowers, and other equipment. The service department uses a job order cost system to determine the cost of each job, such as oil changes, tune ups, and repairs. The department assigns conversion costs through a cost driver rate on the basis of direct labor hours. The cost driver rate additionally includes a markup of 25% on the job’s conversion costs in order to provide a reasonable profit for Hillman. The customer’s invoice itemizes prices for parts and labor, where the stated labor rate is the department’s cost driver rate, which includes direct labor costs, assigned overhead costs, and the 25% markup on conversion costs. Hillman Company’s service department estimated the following information for the current year:

Salaries of mechanics


Fringe benefits


General and administrative




Billable direct labor hours



(a) Determine Hillman Company’s service department’s cost driver rate for assigning conversion costs on the basis of billable direct labor hours.

(b) Job 254 required $47.40 of materials and 0.7 direct labor hour. Determine the price charged for job 254.

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