Maria's Custom Tailoring is very labor-intensive. Therefore, Maria has decided to use direct labor hours as the cost driver for assigning overhead costs to specific jobs. During the month of February, the company incurred overhead costs of $3,000. Total direct labor hours during the month totaled 600. Out of a total of 30 different jobs worked during the month, Job 100 required 6 direct labor hours to complete and Job 200 required 10 direct labor hours. The total amount of overhead allocated to these two jobs is: a. $80 b. $187.50 c. $37.50 d. $16

Maria's Custom Tailoring is very labor-intensive. Therefore, Maria has decided to use direct labor hours as the cost driver for assigning overhead costs to specific jobs. During the month of February, the company incurred overhead costs of $3,000. Total direct labor hours during the month totaled 600. Out of a total of 30 different jobs worked during the month, Job 100 required 6 direct labor hours to complete and Job 200 required 10 direct labor hours. The total amount of overhead allocated to these two jobs is: a. $80 b. $187.50 c. $37.50 d. $16

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 10E: Compute the total job cost for each of the following scenarios: a. If the direct labor cost method...

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Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen is $35 per unit and $55 is used in direct labor, while the direct material for the king is $55 per unit, and the labor cost is $70 per unit. Box Springs estimates it will make 4,300 queens and 3,000 kings in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: How much does each unit cost to manufacture?
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
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Maria's Custom Tailoring is very labour intensive. Therefore, Maria has decided to use direct labour hours as the cost driver for assigning overhead costs to specific jobs. During the month of February, the company incurred overhead costs of $3,000. Total direct labour hours during the month totalled 600. Out of a total of 30 different jobs worked on during the month, Job 100 required 6 direct labour hours to complete and Job 200 required 10 direct labour hours. The total amount of overhead allocated to these two jobs is:
Antolini Enterprises produces men’s sports coats that are sold by popular department stores. Eachretail order is treated as a job that accumulates materials, labor, and overhead costs for a batch ofsports coats. Management has obtained data on the labor costs for four selected jobs over a six-monthperiod. Each selected job represents a similar style and size of sports coat. The data are as follows: a. Determine the direct labor cost per unit for each job.b. Interpret the trend in per-unit labor cost.c. Determine the direct labor hours per sports coat.d. Interpret what may be happening with Job 192.
Case Construction Company, a three-year-old business, provides contracting and construction services to a variety of clients. Given that each construction job is different from any other, company accountant Susan Kalagnanam decided that it was best to use a job- order costing system to allocate costs to the different jobs. She decided to use construction labour-hours as the basis for overhead allocation. In December 2020, she estimated the following amounts for the year 2021: Direct materials Construction labour. Overhead Construction labour-hours Kalagnanam recorded the following for the first quarter of 2021 for the three jobs that the company started and completed during the quarter: Direct materials $13,395,200 8,165,000 8,847,700 460,000 Construction labour-hours $753,500 School Residential Cinema $904, 200 $1,356,300 36,800 16,100 62,100 Required: 1. Compute the cost of each job using the current system of cost allocation. (Round intermediate calculations to 2 decimal places.)
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Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs based on machine-hours. At the beginning of the year, the company used a cost formula to estimate $4,222,500 in manufacturing overhead cost at an activity level of 563,000 machine-hours. The company spent the month of January working on a large order for 12,100 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials purchased on account, $313,000. b. Raw materials used in production, $255,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $153,000 (one-third direct labor and two-thirds indirect labor). d. Depreciation recorded on factory equipment, $63,200. e. Other manufacturing overhead costs incurred on account, $84,600. f. Manufacturing overhead cost was applied to production on the basis of…
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs based on machine-hours. At the beginning of the year, the company used a cost formula to estimate $4,354,800 in manufacturing overhead cost at an activity level of 573,000 machine-hours. The company spent the month of January working on a large order for 12,100 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials purchased on account, $318,000. b. Raw materials used in production, $259,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $168,000 (one-third direct labor and two-thirds indirect labor). d. Depreciation recorded on factory equipment, $62,400. e. Other manufacturing overhead costs incurred on account, $84,300. f. Manufacturing overhead cost was applied to production on the basis of…