c-1. The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding 23 percent to total manufacturing costs. What would be the bid for job number 110 using an overhead rate of $12.51 per direct labor hour? c-2. The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding 23 percent to total manufacturing costs. What would be the bid for job number 110 using the following three separate overhead rates based on machine hours? Plantwide rate of $3.79 per machine hour Department A overhead rate of $7.50 per machine hour Department B overhead rate of $10.20 per machine hour c-3. Which of the overhead allocation methods would you recommend?
c-1. The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding 23 percent to total manufacturing costs. What would be the bid for job number 110 using an overhead rate of $12.51 per direct labor hour? c-2. The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding 23 percent to total manufacturing costs. What would be the bid for job number 110 using the following three separate overhead rates based on machine hours? Plantwide rate of $3.79 per machine hour Department A overhead rate of $7.50 per machine hour Department B overhead rate of $10.20 per machine hour c-3. Which of the overhead allocation methods would you recommend?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Jasper Company, a machine tooling firm, has several plants. One plant, located in Saint Cloud, Minnesota, uses a job order
costing system for its batch production processes. The Saint Cloud plant has two departments through which most jobs
pass: Plantwide overhead, which includes the plant manager's salary, accounting personnel, cafeteria, and human
resources, is budgeted at $250,000. During the past year, actual plantwide overhead was $242,000. Each department's
overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from
the Saint Cloud plant for the past year are as follows:
Budgeted department overhead
(excludes plantwide overhead)
Actual department overhead
Expected total activity:
Direct labor hours
Machine-hours
Actual activity:
Direct labor hours
Machine-hours
Department A Department B
$ 97,500 $ 540,600
120,000
558, 600
56,000
15,000
13,000
53,000
58,500
13,700
14,000
55,000
For the coming year, the accountants at the Saint Cloud plant are in the process of helping the salesforce create bids for
several jobs. Projected data pertaining only to job number 110 are as follows:
Direct materials
Direct labor cost:
Department A (2,400 hours)
Department B (800 hours)
Machine-hours projected:
Department A
Department B
Units produced
$ 21,500
36,000
11,600
100
1,200
12,000
c-1. The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding 23 percent to total manufacturing costs.
What would be the bid for job number 110 using an overhead rate of $12.51 per direct labor hour?
c-2. The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding 23 percent to total manufacturing costs.
What would be the bid for job number 110 using the following three separate overhead rates based on machine hours?
Plantwide rate of $3.79 per machine hour
Department A overhead rate of $7.50 per machine hour
Department B overhead rate of $10.20 per machine hour
c-3. Which of the overhead allocation methods would you recommend?
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