INSTRUCTIONS: Answer ALL the following questions. ☐ Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead absorption rate based on machine hours; Assembly is based on direct labour hours while Spraying is based on direct labour cost. On 2021 January 01, the company had the following estimates: WELDING ASSEMBLY SPRAYING Production overhead costs $720 000 $700 000 $412 500 Direct labour cost $35.000 $120 000 $150 000 Machine hours 36 000 2 500 5.000 Direct labour hours 4.000 20 000 8.000 The labour rate is $150 per hour for all departments. Job 303A which was started and completed during the year showed the following: WELDING ASSEMBLY SPRAYING Direct material Direct labour hours Machine hours $5.500 80 800 $7 200 $9 500 150 100 100 50 Rental of equipment for job 303A will amount to $35 275. Additional Information: Eastern Enterprises recovers selling, distribution and administrative overheads at a rate of 20% of production costs and profit is based on a margin of 20%. A. Compute overhead absorption rates for each department. B. Calculate the cost of Job 303A, clearly showing expected profit and selling price.
INSTRUCTIONS: Answer ALL the following questions. ☐ Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead absorption rate based on machine hours; Assembly is based on direct labour hours while Spraying is based on direct labour cost. On 2021 January 01, the company had the following estimates: WELDING ASSEMBLY SPRAYING Production overhead costs $720 000 $700 000 $412 500 Direct labour cost $35.000 $120 000 $150 000 Machine hours 36 000 2 500 5.000 Direct labour hours 4.000 20 000 8.000 The labour rate is $150 per hour for all departments. Job 303A which was started and completed during the year showed the following: WELDING ASSEMBLY SPRAYING Direct material Direct labour hours Machine hours $5.500 80 800 $7 200 $9 500 150 100 100 50 Rental of equipment for job 303A will amount to $35 275. Additional Information: Eastern Enterprises recovers selling, distribution and administrative overheads at a rate of 20% of production costs and profit is based on a margin of 20%. A. Compute overhead absorption rates for each department. B. Calculate the cost of Job 303A, clearly showing expected profit and selling price.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 1 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education