*Don't tell me we've lost another bid!" exclaimed Janice Hudson, president of Prime Products Inc. "I'm afraid so," replied Doug Martin, the operations vice president. "One of our competitors underbid us by about $13,000 on the Hastings job." "I just can't figure it out," said Hudson. "It seems we're either too high to get the job or too low to make any money on half the jobs we bid. What's happened?" Prime Products manufactures specialized goods to customers' specifications and operates a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labour cost. The following estimates were made at the beginning of the year: Department Direct labour Manufacturing overhead Direct material Direct labour Manufacturing overhead Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing costs in the three departments as follows: Direct material Direct labour Manufacturing overhead Cutting $ 321,000 $ 577,800 Machining $ 214,000 Assembly $ 428,000 $ 856,000 $ 107,000 Cutting Machining Assembly Overapplied overhead cost Overapplied overhead cost Underapplied overhead cost Cutting $ 23, 200 $13,500 7 Department Machining $ 2,300 $ 4,500 7 5. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year: Total Plant $ 963,000 $1,540,800 Assembly Total Plant $ 8,400 $33,900 $39,400 $21,400 7 7 Department Cutting Machining $823,000 $ 97,000 Assembly $438,000 $348,000 $231,000 $362,400 $609,000 $913,000 $ 98,100 b. Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used. Total Plant $1,358,000 $ 941,400 $1,620,100
*Don't tell me we've lost another bid!" exclaimed Janice Hudson, president of Prime Products Inc. "I'm afraid so," replied Doug Martin, the operations vice president. "One of our competitors underbid us by about $13,000 on the Hastings job." "I just can't figure it out," said Hudson. "It seems we're either too high to get the job or too low to make any money on half the jobs we bid. What's happened?" Prime Products manufactures specialized goods to customers' specifications and operates a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labour cost. The following estimates were made at the beginning of the year: Department Direct labour Manufacturing overhead Direct material Direct labour Manufacturing overhead Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing costs in the three departments as follows: Direct material Direct labour Manufacturing overhead Cutting $ 321,000 $ 577,800 Machining $ 214,000 Assembly $ 428,000 $ 856,000 $ 107,000 Cutting Machining Assembly Overapplied overhead cost Overapplied overhead cost Underapplied overhead cost Cutting $ 23, 200 $13,500 7 Department Machining $ 2,300 $ 4,500 7 5. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year: Total Plant $ 963,000 $1,540,800 Assembly Total Plant $ 8,400 $33,900 $39,400 $21,400 7 7 Department Cutting Machining $823,000 $ 97,000 Assembly $438,000 $348,000 $231,000 $362,400 $609,000 $913,000 $ 98,100 b. Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used. Total Plant $1,358,000 $ 941,400 $1,620,100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:▬▬▬▬▬▬▬▬▬+
*Don't tell me we've lost another bid!" exclaimed Janice Hudson, president of Prime Products Inc. "I'm afraid so," replied Doug Martin,
the operations vice president. "One of our competitors underbid us by about $13,000 on the Hastings job." "I just can't figure it out."
said Hudson. "It seems we're either too high to get the job or too low to make any money on half the jobs we bid. What's happened?"
Prime Products manufactures specialized goods to customers' specifications and operates a job-order costing system. Manufacturing
overhead cost is applied to jobs on the basis of direct labour cost. The following estimates were made at the beginning of the year:
Department
Direct labour
Manufacturing overhead
Direct material
Direct labour
Manufacturing overhead
Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing
costs in the three departments as follows:
Direct material
Direct labour
Manufacturing overhead
Cutting
$ 321,000
$ 577,800
Cutting
Machining
Assembly
Total plant
Machining Assembly
$ 214,000 $ 428,000
$ 856,000 $ 107,000
Overapplied overhead cost
Overapplied overhead cost
Underapplied overhead cost
Overapplied overhead cost
Department
5. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year:
Department
Cutting Machining Assembly
$823,000 $ 97,000 $438,000
$348,000 $231,000 $362,400
$609,000 $913,000 $ 98,100
Total Plant
$ 963,000
$1,540,800
Cutting Machining
$ 23, 200 $ 2,300
$13,500
$ 4,500
हैं:
?
Assembly Total Plant
$ 8,400 $33,900
$ 21,400
$39,400
b. Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used.
Total Plant
$1,358,000
$ 941,400
$1,620,100
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