238 Problem 4 The Ellery Corporation uses the job order cost system of account a list of the jobs completed during the month of March show materials requisitioned and for direct labor cost. Job Material Cost Direct labo P. 123 300 1,080 720 600 124 940 1,400 5,120 125 126 4,200 Required: Assuming that factory overhead is applied on the basis of direc the predetermined rate is 180%, compute: 1. The amount of overhead to be added to the cost of each job c 2. The total cost of each job completed during the month.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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2021.12.0203:13
Cost Accounting
CHAPTER
238
Cost Accounting
Chapter 8 Accounting for Factory Overhead
Problem 4
The Ellery Corporation uses the job order coșt system of accounting. Shown below is
a list of the jobs completed during the month of March showing the charges for
materials requisitioned and for direct labor cost.
Problem 6
The ABC Company has two service departments and two producing departments
Job
123
Material Cost
P 300
1,080
Service Departments' to costs:
Department 1 - Repair
Department 2 - Cafeteria
P 14,000
11,000
Direct labor
P 600
124
940
1,400
5,120
Próducing Departments' Factory OH Costs
Department A - Machinery
Department B - Assembly
52,500
48,000
125
720
126
4,200
Required:
Assuming that factory overhead is applied on the basis of direct labor costs and that
the predetermined rate is 180%, compute:
1. The amount of overhead to be added to the cost of each job completed
2. The total cost of each job completed during the month.
Additional information
Square Feet
1,500
1,800
2,000
3,000
8.300
The costs of the Repair Department are allocated on the basis of square feet.
The costs of the Cafeteria Department are allocated on the basis of estimated
direct labor hours. The producing departments use estimated direct labor
hours: 1,500 in Department A and 1,250 in Department B.
Required: Allocate the total costs of the service departments to the producing
departments ( compute the departments' factory rate) by using the following:
Est. Direct Labor Hours
3,500
1,200
2,300
1,700
8,700
Department
Repair
Cafeteria
Machinery
Assembly
Total
Problem 5
Thermal Corporation has two producing department and two service departments
labeled P1, P2, S1, and S2, respectively. Direct costs for each department and the
proportion of services costs used by various departments are as follows:
Proportion of services used by:
P2
Cost
Direct
Center
P1
Costs
P.
S1
S2
P1
90,000
60,000
20,000
32,000
P2
1. Direct method
.10
S1.
S2
.80
.10
2. Step method start with the Repair Department
.20
.50
.30
In calculating predetermined overhead rates, machine hours are used as the base in PI
Problem 7
and direct labor hours as the base in P2.
Machine hours
Direct labor hours
P1
50,000
40,000
P2
40,000
20,000
Central Parkway Corp. has two producing and two service departments labeled P1,
P2, S1, S2, respectively. Direct costs for each department and the proportion of
service costs used by the various departments are as follows:
Requirements:
1. Allocate the şervice department costs to operating departments and compute the
factory overhead rate for P1 and P2 using the following methods:
A. Direct Method
b. Step method - start with S1
Proportion of services used by:
P1
Cost
Direct
Çenter
P2
Costs
P 120,000
80,000
25,000
10,000
S1
S2
P1
P2
S1
.25
.50
.25
:50
.40
c. Algebraic method
2. Assume the company uses just one basis for applying overhead to jobs going
through both P1 and P2, compute the overhead rate using direct labor hours as
base.
S2
.10
Required: Allocate the service department cost using algebraic method.
19 19 4
Transcribed Image Text:2021.12.0203:13 Cost Accounting CHAPTER 238 Cost Accounting Chapter 8 Accounting for Factory Overhead Problem 4 The Ellery Corporation uses the job order coșt system of accounting. Shown below is a list of the jobs completed during the month of March showing the charges for materials requisitioned and for direct labor cost. Problem 6 The ABC Company has two service departments and two producing departments Job 123 Material Cost P 300 1,080 Service Departments' to costs: Department 1 - Repair Department 2 - Cafeteria P 14,000 11,000 Direct labor P 600 124 940 1,400 5,120 Próducing Departments' Factory OH Costs Department A - Machinery Department B - Assembly 52,500 48,000 125 720 126 4,200 Required: Assuming that factory overhead is applied on the basis of direct labor costs and that the predetermined rate is 180%, compute: 1. The amount of overhead to be added to the cost of each job completed 2. The total cost of each job completed during the month. Additional information Square Feet 1,500 1,800 2,000 3,000 8.300 The costs of the Repair Department are allocated on the basis of square feet. The costs of the Cafeteria Department are allocated on the basis of estimated direct labor hours. The producing departments use estimated direct labor hours: 1,500 in Department A and 1,250 in Department B. Required: Allocate the total costs of the service departments to the producing departments ( compute the departments' factory rate) by using the following: Est. Direct Labor Hours 3,500 1,200 2,300 1,700 8,700 Department Repair Cafeteria Machinery Assembly Total Problem 5 Thermal Corporation has two producing department and two service departments labeled P1, P2, S1, and S2, respectively. Direct costs for each department and the proportion of services costs used by various departments are as follows: Proportion of services used by: P2 Cost Direct Center P1 Costs P. S1 S2 P1 90,000 60,000 20,000 32,000 P2 1. Direct method .10 S1. S2 .80 .10 2. Step method start with the Repair Department .20 .50 .30 In calculating predetermined overhead rates, machine hours are used as the base in PI Problem 7 and direct labor hours as the base in P2. Machine hours Direct labor hours P1 50,000 40,000 P2 40,000 20,000 Central Parkway Corp. has two producing and two service departments labeled P1, P2, S1, S2, respectively. Direct costs for each department and the proportion of service costs used by the various departments are as follows: Requirements: 1. Allocate the şervice department costs to operating departments and compute the factory overhead rate for P1 and P2 using the following methods: A. Direct Method b. Step method - start with S1 Proportion of services used by: P1 Cost Direct Çenter P2 Costs P 120,000 80,000 25,000 10,000 S1 S2 P1 P2 S1 .25 .50 .25 :50 .40 c. Algebraic method 2. Assume the company uses just one basis for applying overhead to jobs going through both P1 and P2, compute the overhead rate using direct labor hours as base. S2 .10 Required: Allocate the service department cost using algebraic method. 19 19 4
Cost Accounting
CHAPTER
2021.12.02 03:13
Cost Accounting
241
Problem 8
Chapter 8 Accounting for Factory Overhead
Problem 11
The Strawberry Corporation has the following information relating to applied and
actual factory overhead:
Megastar Company's normal operating capacity is estimated at 95,000 machine hours
per month. At this operating level, fixed factory overhead is estimated to be P 34,200
and variable factory overhead is.estimated to be P41,800. During November, the
company operated 100,000 machine hours. Actual factory overhead for the month
totaled P78,600.
Required: Compute for the following
1. The over or underapplied factory overhead
2. The spending variance.
3. The idle capacity variance.
P30,500
39,700
Applied factory overhead costs are in the following accounts.
P32,000
3,500
4,200
Factory overhead control
Applied factory overhead
Cost of goods sold
Ending work in process inventory
Ending finished goods inventory
Required:
a. Allocate the under or overapplied factory overhead to those accounts distorted
by using what turned out to be an incorrect factory overhead application rate.
b. Prepare the end-of-period entries.
. Problem 9
Normal annual capacity for Abner Company is 72,000 units, with fixed factory
overhead budgeted at P33,840 and an estimated variable factory overhead rate for
P4.20. per unit. During October, actual production was 5,400 units, with a total
overhead of P15,910.
Required: Compute for the following
1. The applied factory overhead
2. The over or underapplied factory overhead
3. The spending variance
Problem 12
For many years Tinor Company has used a manufacturing overhead rate based on
direct labor hours. A new plant accountant has suggested that the company may be
able to assign overhead costs to products more accurately by using an activity-based
costing system. The accountant explains that by creating an overhead rate for each
production activity that causeş overhead costs, the resulting product costs will reflect
an accurate measure of overhead cost. The direct material cost is P120 per unit. The
budgeted hours is 8,030 direct labor hours. The accountant has identified activity
centers to which overhead costs are assigned. The cost pool amounts for these centers
and their selected activity drivers for 2012:
4. The idle capacity variance
ACTIVITY CENTERS
COSTS
ACTIVITY DRIVERS
Problem 10
Materials handling
Scheduling and setups
Design section
No. of parts
P 60,000
80,000
10,750
50.000
P 200.750
1,200 times handled
400 setups
100 changes
500 parts
Norman Corporation uses a flexible budget system and prepared the following
information for 2012.
Normal Capacity Maximum Capacity
Percentage of capacity
Direct labor hours
Total budgeted factory overhead P252,000
Norman planned to operate at normal capacity but actually operated, at 90% of
maximum capacity during 2012. The actual factory overhead for 2012 was P273,000:
%08
48,000
The company's products and other operating statistics follow:
60,000
P270,000
No. of
No. of
Qty.
Produced
No. of time No. of
Prod.
Parts
Changes
Setups
Cost
P6,000
18,000
Handled
A.
B.
Required:
1. Compute the unit cost for each product using direct labor hours as the overhead
application base.
2. Compute the unit costs for each product using activity-based costing
20
.40.
3.
5.
Requirements:
1. Using HI-LÓ method, compute for the variable rate per hour.
2. Détermine the fixed portion of the budgeted factory overhead.
3. Compute for the spending variance.
4. Compute for the Idle capacity variance.
19 19
20
17.
26
Transcribed Image Text:Cost Accounting CHAPTER 2021.12.02 03:13 Cost Accounting 241 Problem 8 Chapter 8 Accounting for Factory Overhead Problem 11 The Strawberry Corporation has the following information relating to applied and actual factory overhead: Megastar Company's normal operating capacity is estimated at 95,000 machine hours per month. At this operating level, fixed factory overhead is estimated to be P 34,200 and variable factory overhead is.estimated to be P41,800. During November, the company operated 100,000 machine hours. Actual factory overhead for the month totaled P78,600. Required: Compute for the following 1. The over or underapplied factory overhead 2. The spending variance. 3. The idle capacity variance. P30,500 39,700 Applied factory overhead costs are in the following accounts. P32,000 3,500 4,200 Factory overhead control Applied factory overhead Cost of goods sold Ending work in process inventory Ending finished goods inventory Required: a. Allocate the under or overapplied factory overhead to those accounts distorted by using what turned out to be an incorrect factory overhead application rate. b. Prepare the end-of-period entries. . Problem 9 Normal annual capacity for Abner Company is 72,000 units, with fixed factory overhead budgeted at P33,840 and an estimated variable factory overhead rate for P4.20. per unit. During October, actual production was 5,400 units, with a total overhead of P15,910. Required: Compute for the following 1. The applied factory overhead 2. The over or underapplied factory overhead 3. The spending variance Problem 12 For many years Tinor Company has used a manufacturing overhead rate based on direct labor hours. A new plant accountant has suggested that the company may be able to assign overhead costs to products more accurately by using an activity-based costing system. The accountant explains that by creating an overhead rate for each production activity that causeş overhead costs, the resulting product costs will reflect an accurate measure of overhead cost. The direct material cost is P120 per unit. The budgeted hours is 8,030 direct labor hours. The accountant has identified activity centers to which overhead costs are assigned. The cost pool amounts for these centers and their selected activity drivers for 2012: 4. The idle capacity variance ACTIVITY CENTERS COSTS ACTIVITY DRIVERS Problem 10 Materials handling Scheduling and setups Design section No. of parts P 60,000 80,000 10,750 50.000 P 200.750 1,200 times handled 400 setups 100 changes 500 parts Norman Corporation uses a flexible budget system and prepared the following information for 2012. Normal Capacity Maximum Capacity Percentage of capacity Direct labor hours Total budgeted factory overhead P252,000 Norman planned to operate at normal capacity but actually operated, at 90% of maximum capacity during 2012. The actual factory overhead for 2012 was P273,000: %08 48,000 The company's products and other operating statistics follow: 60,000 P270,000 No. of No. of Qty. Produced No. of time No. of Prod. Parts Changes Setups Cost P6,000 18,000 Handled A. B. Required: 1. Compute the unit cost for each product using direct labor hours as the overhead application base. 2. Compute the unit costs for each product using activity-based costing 20 .40. 3. 5. Requirements: 1. Using HI-LÓ method, compute for the variable rate per hour. 2. Détermine the fixed portion of the budgeted factory overhead. 3. Compute for the spending variance. 4. Compute for the Idle capacity variance. 19 19 20 17. 26
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