| Course | AC420 Cost Accounting |
|---|---|
| Unit | Unit 3 |
| Paper type | Job order costing problem |
| Length | About 550 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC420 Unit 3
Job 4417, Nine Hundred Logo Griddles: A Unit 3 Job Order Costing Problem With Two Overhead Rates
[Student Name]
Purdue University Global
AC420: Cost Accounting
Unit 3 Job Order Costing Problem
[Instructor Name]
[Date]
Bellhaven Iron Works, its customer and every figure are composite; the textbooks and article cited are real.
Predetermined Overhead Rates
1. Foundry: $2,548,000 estimated overhead over 14,000 molding-line hours, $182.00 per molding-line hour. The molding line is machine-paced, so its costs follow machine time.
2. Finishing: $1,130,400 estimated overhead over 36,000 direct labor hours, $31.40 per labor hour. Finishing depends on grinding and seasoning crews, so its costs follow crew hours.
Departmental rates are used because a single plant-wide rate would charge labor-heavy jobs for machine costs they barely use, a distortion Cooper and Kaplan (1988) identified as a main source of misleading product costs.
Job Cost Sheet
Header: Job 4417; customer, a composite outdoor outfitter; 900 griddles with embossed logo; started March 3, completed March 19.
Direct materials:
1. Iron charge, 11,700 pounds at $0.29: $3,393.00.
2. Sand cores, 900 at $1.23: $1,107.00.
3. Packaging, 900 at $0.90: $810.00.
4. Embossed logo pattern: $2,850.00. The pattern is direct material because it serves this job and no other.
Total direct materials: $8,160.00.
Direct labor:
1. Foundry, 64 hours at $27.50: $1,760.00.
2. Finishing, 118 hours at $24.00: $2,832.00.
Total direct labor: $4,592.00.
Applied overhead:
1. Foundry, 21 molding-line hours at $182.00: $3,822.00.
2. Finishing, 118 labor hours at $31.40: $3,705.20.
Total applied overhead: $7,527.20.
Job 4417 costs $20,279.20, or $22.53 a griddle, and more than a third of that is overhead applied through rates set before the year began, which is why the job's cost depends on how well those rates were estimated.
Total job cost: $20,279.20. Cost per griddle: $22.53.
What the Cost Sheet Shows
Overhead is 37 percent of the job's cost, materials 40 percent and labor 23 percent. The pattern alone adds $3.17 to every griddle, so a repeat order of the same logo, which would reuse the pattern, would cost about $19.36 a griddle on the same rates. That difference matters when the sales team quotes reorders, and it is visible only because the pattern was charged to this job rather than spread through overhead. The finishing department's 118 hours drive both its labor and its overhead, so any improvement in grinding time lowers two lines at once, while the foundry's cost follows the 21 hours the job held the molding line.
Year-End Proration
Applied overhead for the year was $3,604,000 and actual overhead $3,650,800, leaving $46,800 underapplied, about 1.3 percent of applied overhead. The problem requires proration on the basis of applied overhead in each ending balance:
1. Ending work in process: $324,360 of applied overhead, 9 percent: $4,212.
2. Finished goods: $576,640, 16 percent: $7,488.
3. Cost of goods sold: $2,703,000, 75 percent: $35,100.
Total: $46,800.
A straight write-off would have charged all $46,800 to cost of goods sold and lowered gross margin by $11,700 more than proration does this year, because $4,212 and $7,488 belong to units still in inventory. At 1.3 percent, many companies would simply write the difference off as immaterial (Datar & Rajan, 2021). Proration is more accurate because it restates each account at roughly what actual overhead rates would have given (Garrison et al., 2021).
References
Cooper, R., & Kaplan, R. S. (1988). Measure costs right: Make the right decisions. Harvard Business Review, 66(5), 96-103.
Datar, S. M., & Rajan, M. V. (2021). Horngren's cost accounting: A managerial emphasis (17th ed.). Pearson.
Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (17th ed.). McGraw Hill.
What the AC420 Unit 3 assignment asks for
Unit 3 of AC420 asks you to cost one job from start to finish. Begin with the predetermined overhead rates, deriving each from estimated overhead and an allocation base, and defend each base by what drives that department's costs. Lay out the cost sheet under a header with the job number, quantity and dates, then sections for direct materials, direct labor and applied overhead, each line showing quantity, rate and amount. Decide whether job-specific items, such as tooling or a pattern, are direct costs, and say why. Total the job and compute a unit cost. Where the problem includes year-end over- or underapplied overhead, dispose of it as instructed, by proration or by closing to cost of goods sold, and explain the effect of the method chosen. Journalize transfers only if asked. Cite the textbook and a source on overhead allocation in APA 7.
How the AC 420 Unit 3 example is put together
The sample opens by deriving two rates: $2,548,000 over 14,000 molding-line hours and $1,130,400 over 36,000 labor hours, each base defended in a sentence, with Cooper and Kaplan cited on plant-wide rate distortion. The cost sheet lists four materials lines totaling $8,160, including the $2,850 pattern, two labor lines totaling $4,592 and two overhead lines totaling $7,527.20. The highlighted sentence notes that over a third of the job's cost depends on rates set before the year began. A section on what the cost sheet shows breaks the total into percentages and prices a repeat order without the pattern at about $19.36 a griddle. The proration schedule spreads $46,800 as $4,212, $7,488 and $35,100, and states that a write-off would have cut gross margin by $11,700 more, citing Datar and Rajan and Garrison and colleagues.
AC420 Unit 3 rubric: what earns full points
AC420 job order problems are graded first on accuracy and then on the reasoning behind each classification. Overhead rates must be derived correctly, and choosing a different base for each department needs a stated reason tied to how costs arise. Every line on the cost sheet should show its quantity and rate so the total can be checked. Classifying a job-specific item correctly, and explaining why, earns credit for judgment. Unit costs must follow from the total. The disposal of over- or underapplied overhead is a separate criterion: the method must match the instructions, the base must be stated, and the effect on income should be explained. Clear layout, consistent rounding and totals that tie across sections all count. Citations to the textbook in APA 7 complete the Purdue Global marks for this problem.
AC420 Unit 3 help from the desk
Many Unit 3 answers apply one plant-wide rate even when the problem supplies departmental data. Overhead is applied on actual rather than predetermined rates. Job-specific tooling is buried in overhead, which spreads it across jobs that never used it. Labor hours in one department are multiplied by another department's rate. Unit cost is computed on units started rather than units in the job. Underapplied overhead is closed to cost of goods sold when the problem asks for proration, or prorated on total balances rather than applied overhead. If your problem covers a print shop, a law firm or a construction job, our writers can build the cost sheet and the year-end schedule from your section's numbers.
Get an AC420 Unit 3 example written to your instructions
Job data from your Unit 3 problem comes first: requisitions, labor hours by department, estimated overhead and allocation bases, plus whatever disposition rule applies to over- or underapplied overhead. Add the rubric. The cost sheet, rate derivations and year-end schedule are built on those figures within 24-48h, and a first custom sample carries no charge. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More AC420 papers and BS in Accounting samples
- AC420 Unit 1: Internal Cost Figures Discussion Post
- AC420 Unit 2: Mixed Cost Behavior Analysis
- AC420 Unit 4: Process Costing Worksheet
- AC420 Unit 5: Activity-based Costing Comparison
- AC420 Unit 6: Master Budget Schedule
- AC420 Unit 7: Standard Cost Variance Analysis
- AC420 Unit 8: Seminar Reflection
- AC420 Unit 9: Relevant Cost Decision Memo
- AC420 Unit 10: Transfer Pricing Analysis
- AC410 Unit 3: Materiality Computation
- AC314 Unit 3: Data Flow Diagram Set
- AC312 Unit 3: Data Cleaning Log
- AC302 Unit 3: Indirect Operating Section
AC420 Unit 3 questions, answered
When should underapplied overhead be prorated instead of closed to cost of goods sold?
When the amount is material or the problem says so. Here the difference is about 1.3 percent of applied overhead, small enough that many companies would simply write it off against cost of goods sold, a point the sample makes. This problem required proration, so the schedule prorates and shows the 11,700 dollars that a write-off would have kept out of inventory.
Why not use one plant-wide overhead rate?
Because the two departments consume overhead for different reasons. The molding line's costs follow machine time, while finishing costs follow crew hours at the grinders and seasoning ovens. A single rate would charge a labor-heavy job for machine costs it barely used. AC420 problems that supply departmental data usually expect departmental rates, and the sample explains the choice in a sentence.
Do journal entries belong in the answer?
Only where the instructions ask. Some AC420 sections want each transfer journalized, from the first requisition to the sale; others grade the cost sheet and the proration alone. Where the prompt includes entries, the sample places them after the summary box and ties every amount to a figure already on the sheet.
Where can I find a free AC420 Unit 3 sample paper?
This page holds a complete AC420 Unit 3 job order costing problem for 900 logo griddles at a composite cookware maker, with two overhead rates, a full cost sheet, a proration schedule and APA 7 references.
Why is the logo pattern direct material in AC420 Unit 3?
It was made for Job 4417 and serves no other job, so it can be traced to the job directly. Spreading it through overhead would charge its $2,850 to griddles that never used it.