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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exhibit 3 Standard Unit Costs Material Direct labor Overhead @ 439% of direct labor $ Standard unit cost. Overhead Machine depreciation Set-up labor Receiving Materials handling Engineering Packing and shipping Maintenance 682,688 155,600 Show Transcribed Text Total run labor = 9,725 hours x $16 = $155,600 Overhead rate Destin Brass Products Co. = 439% Material Material overhead (48%) Set-up labor Direct labor Other overhead (machine hour basis) Revised standard cost Material Related Overhead Exhibit 4 Revised Unit Costs Receiving Materials handling Total Total Valves $16.00 $37.56 Overhead Absorption Rate $220,000 $458,000 Other Overhead Machine depreciation Engineering Packing and shipping Maintenance. Show Transcribed Text 4.00 17.56 Overhead Absorption Rate $460,000 10,800 hours = 48% (materials cost basis) Valves $16.00 7.68 .02 4.00 21.30 $49.00 -$42.59 per machine hour Pumps Flow Controllers $20.00 9.60 .05 8.00 21.30 do Flow Controllers $460,000 $22.00 10.56 48 py or Post or Post 1. Compare the estimated costs you calculate to existing standard unit costs (Exhibit 3) and the revised units costs (Exhibit 4). What causes the different product costing methods to produce such different results? (Please Answer).
Transcribed Image Text:Exhibit 3 Standard Unit Costs Material Direct labor Overhead @ 439% of direct labor $ Standard unit cost. Overhead Machine depreciation Set-up labor Receiving Materials handling Engineering Packing and shipping Maintenance 682,688 155,600 Show Transcribed Text Total run labor = 9,725 hours x $16 = $155,600 Overhead rate Destin Brass Products Co. = 439% Material Material overhead (48%) Set-up labor Direct labor Other overhead (machine hour basis) Revised standard cost Material Related Overhead Exhibit 4 Revised Unit Costs Receiving Materials handling Total Total Valves $16.00 $37.56 Overhead Absorption Rate $220,000 $458,000 Other Overhead Machine depreciation Engineering Packing and shipping Maintenance. Show Transcribed Text 4.00 17.56 Overhead Absorption Rate $460,000 10,800 hours = 48% (materials cost basis) Valves $16.00 7.68 .02 4.00 21.30 $49.00 -$42.59 per machine hour Pumps Flow Controllers $20.00 9.60 .05 8.00 21.30 do Flow Controllers $460,000 $22.00 10.56 48 py or Post or Post 1. Compare the estimated costs you calculate to existing standard unit costs (Exhibit 3) and the revised units costs (Exhibit 4). What causes the different product costing methods to produce such different results? (Please Answer).
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