Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year. Supplies $220,000 Gas 52,000 Indirect labor 180,000 Supervision 77,000 Depreciation on equipment 47,000 Depreciation on the buliding 41,000 Rental of special equipment 14,000 Electricity (for lighting, heating, and air conditioning)
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.
Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various
| Supplies | $220,000 |
| Gas | 52,000 |
| Indirect labor | 180,000 |
| Supervision | 77,000 |
| 47,000 | |
| Depreciation on the buliding | 41,000 |
| Rental of special equipment | 14,000 |
| Electricity (for lighting, heating, and air conditioning) | 27,200 |
| Telephone | 4,700 |
| Landscaping service | 1,300 |
| Other overhead | 57,000 |
In the coming year, Johnston expects to powder coat 160,000 units. Each unit takes 1.4 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovens—all units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed.
Required:
Question Content Area
1. Calculate the number of direct labor hours Johnston must budget for the coming year. Calculate the variable overhead rate. Calculate the total fixed overhead for the coming year. When required, round your answers to the nearest cent and use the rounded answers in subsequent requirements.
| Direct labor hours | fill in the blank 06600afe0fbf02c_1 | |
| Variable overhead rate | $fill in the blank 06600afe0fbf02c_2 | per direct labor hour |
| Total fixed overhead | $fill in the blank 06600afe0fbf02c_3 |
Question Content Area
2. Prepare an overhead budget for Johnston for the coming year. Show the total variable overhead, total fixed overhead, and total overhead. When required, round your answers to the nearest cent.
| Budgeted direct labor hours | fill in the blank 7d4a7a02dfa5fae_1 |
| Variable overhead rate | $fill in the blank 7d4a7a02dfa5fae_2 |
| Budgeted variable overhead | $fill in the blank 7d4a7a02dfa5fae_3 |
| Budgeted fixed overhead | fill in the blank 7d4a7a02dfa5fae_4 |
| Total budgeted overhead | $fill in the blank 7d4a7a02dfa5fae_5 |
Question Content Area
Calculate the fixed overhead rate and the total overhead rate. If required, round your answers to the nearest cent.
| Fixed overhead rate | $fill in the blank eb55bf07302bfad_1 per direct labor hour |
| Total overhead rate | $fill in the blank eb55bf07302bfad_2 per direct labor hour |
Question Content Area
3. What if Johnston had expected to make 158,000 units next year? Assume that the variable overhead per unit does not change and the total fixed overhead amounts do not change. Calculate the new budgeted direct labor hours.
fill in the blank 85a47b03d027fb8_1
Question Content Area
Prepare a new overhead budget. If required, round your answers to the nearest cent.
| Budgeted direct labor hours | fill in the blank 8a4c0f004fdb02c_1 |
| Variable overhead rate | $fill in the blank 8a4c0f004fdb02c_2 |
| Budgeted variable overhead | $fill in the blank 8a4c0f004fdb02c_3 |
| Budgeted fixed overhead | fill in the blank 8a4c0f004fdb02c_4 |
| Total budgeted overhead | $fill in the blank 8a4c0f004fdb02c_5 |
Question Content Area
Calculate the fixed overhead rate and the total overhead rate. If required, round your answers to the nearest cent.
| Fixed overhead rate | $fill in the blank 39bceb015039ffa_1 per direct labor hour |
| Total overhead rate | $fill in the blank 39bceb015039ffa_2 per direct labor hour |
Step by step
Solved in 3 steps
