4. Compute the total period costs 5. Calculate the overhead variance and explain why it is favorable or unfavorable

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question
For Problem 5 : Kindly answer items only #4 and #5. For Problem 10: Kindly answer all 3 requirements.
Problem 5.
Sportsman, Inc. produces different sizes of basketballs. The following costs were
incurred during the year for PBA-sized basketball production.
Materials
Labor
Actual Factory overhead
Selling expenses.
General and Administrative expenses
P81,250 (23% is indirect)
87,500 (27% is indirect)
70,000 (including indirect materials
and indirect labor)
3,250
23,250
Sportsman applies overhead to production at 100% of direct labor cost. There were
no work in process at the end of the year and there were no finished goods inventory
at the beginning. 5,000 units were produced, and 90% of the units produced were
sold.
Required:
1. Compute the prime costs
2. Compute the conversion costs.
3. Compute the total product costs
4. Compute the total period costs
5. Calculate the overhead variance and explain why it is favorable or unfavorable
Transcribed Image Text:Problem 5. Sportsman, Inc. produces different sizes of basketballs. The following costs were incurred during the year for PBA-sized basketball production. Materials Labor Actual Factory overhead Selling expenses. General and Administrative expenses P81,250 (23% is indirect) 87,500 (27% is indirect) 70,000 (including indirect materials and indirect labor) 3,250 23,250 Sportsman applies overhead to production at 100% of direct labor cost. There were no work in process at the end of the year and there were no finished goods inventory at the beginning. 5,000 units were produced, and 90% of the units produced were sold. Required: 1. Compute the prime costs 2. Compute the conversion costs. 3. Compute the total product costs 4. Compute the total period costs 5. Calculate the overhead variance and explain why it is favorable or unfavorable
Problem 10
Solville Motors Co. makes motorcycles. Management wants to estimate
overhead costs to plan its operations. A recent trade publication revealed that
overhead costs tend to vary with machine hours. To check this, they collected the
following data for the past 12 months.
44
Month No.
Machine Hours
175
2
170
3
160
4
190
5
175
IT
6
200
7
160
8
150
9
210
10
180
11
170
145
12
Cost Accounting
Overhead Costs
P 4,500
4,225
4,321
5.250
4,800
5,100
4,450
4,200
5,475
4,760
4,325
3,975
Requirements
1. Use the high-low method to estimate the fixed and variable portion of
overhead costs based on machine hours.
2. If the plant is planning to operate at a level of 200 machine hours next
period, what would be the estimated overhead costs?
3. Use the method of least square to estimate the fixed and variable portion of
overhead costs based on machine hours.
Transcribed Image Text:Problem 10 Solville Motors Co. makes motorcycles. Management wants to estimate overhead costs to plan its operations. A recent trade publication revealed that overhead costs tend to vary with machine hours. To check this, they collected the following data for the past 12 months. 44 Month No. Machine Hours 175 2 170 3 160 4 190 5 175 IT 6 200 7 160 8 150 9 210 10 180 11 170 145 12 Cost Accounting Overhead Costs P 4,500 4,225 4,321 5.250 4,800 5,100 4,450 4,200 5,475 4,760 4,325 3,975 Requirements 1. Use the high-low method to estimate the fixed and variable portion of overhead costs based on machine hours. 2. If the plant is planning to operate at a level of 200 machine hours next period, what would be the estimated overhead costs? 3. Use the method of least square to estimate the fixed and variable portion of overhead costs based on machine hours.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Performance measurements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education