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Matthew was looking back at the profitability of a few jobs from the prior year, wondering if more profit could have been generated. The executive team of this custom manufacturing shop tries to achieve gross margins near 50% for all of its projects. Each completed job that Matthew examined was profitable when overhead costs were determined using the company's actual costing system. Still, since he didn't have those total job costs until the end of the year, he wondered if he could have built in a larger gross margin if he had been able to better estimate these total job costs sooner. Here is more detailed information on the three jobs Matthew is reviewing Actual DM costs Actual DL costs Applied MOH costs under actual costing Total costs Sales revenue Job #82 $16,600 10,100 90,720 63,630 36,825 117,320 90.330 56,000 199,000 134,000 Job #45 $5,800 4,250 26,775 Job #76 $12,200 14,400 In this manufacturing company, MOH is applied based on direct labor costs.

Matthew was looking back at the profitability of a few jobs from the prior year, wondering if more profit could have been generated. The executive team of this custom manufacturing shop tries to achieve gross margins near 50% for all of its projects. Each completed job that Matthew examined was profitable when overhead costs were determined using the company's actual costing system. Still, since he didn't have those total job costs until the end of the year, he wondered if he could have built in a larger gross margin if he had been able to better estimate these total job costs sooner. Here is more detailed information on the three jobs Matthew is reviewing Actual DM costs Actual DL costs Applied MOH costs under actual costing Total costs Sales revenue Job #82 $16,600 10,100 90,720 63,630 36,825 117,320 90.330 56,000 199,000 134,000 Job #45 $5,800 4,250 26,775 Job #76 $12,200 14,400 In this manufacturing company, MOH is applied based on direct labor costs.

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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Matthew was looking back at the profitability of a few jobs from the prior year, wondering if more profit could have been generated. The executive team of this custom manufacturing shop tries to achieve gross margins near 50% for all of its projects. Each completed job that Matthew examined was profitable when overhead costs were determined using the company's actual costing system. Still, since he didn't have those total job costs until the end of the year, he wondered if he could have built in a larger gross margin if he had been able to better estimate these total job costs sooner. Here is more detailed information on the three jobs Matthew is reviewing: Actual DM costs Actual DL costs Applied MOH costs under actual costing Total costs Sales revenue Job #76 $5,800 $12,200 4,250 14,400 26,775 90,720 36,825 117.320 56,000 199,000 Job #45 Job #82 $16,600 10.100 63,630 90,330 134,000 In this manufacturing company, MOH is applied based on direct labor costs.
Transcribed Image Text:Matthew was looking back at the profitability of a few jobs from the prior year, wondering if more profit could have been generated. The executive team of this custom manufacturing shop tries to achieve gross margins near 50% for all of its projects. Each completed job that Matthew examined was profitable when overhead costs were determined using the company's actual costing system. Still, since he didn't have those total job costs until the end of the year, he wondered if he could have built in a larger gross margin if he had been able to better estimate these total job costs sooner. Here is more detailed information on the three jobs Matthew is reviewing: Actual DM costs Actual DL costs Applied MOH costs under actual costing Total costs Sales revenue Job #76 $5,800 $12,200 4,250 14,400 26,775 90,720 36,825 117.320 56,000 199,000 Job #45 Job #82 $16,600 10.100 63,630 90,330 134,000 In this manufacturing company, MOH is applied based on direct labor costs.
If Matthew had used normal costing instead of actual costing, what would the gross margin amount and percentage have been for each job? Assume the same selling prices would have been charged, and assume a budgeted MOH rate of $7/DL dollar would have been used. (Round percentages to 2 decimal places, e.g. 52.75%.) Gross margin Gross margin percentage $ Job #45 Job #76 Job #82 %
Transcribed Image Text:If Matthew had used normal costing instead of actual costing, what would the gross margin amount and percentage have been for each job? Assume the same selling prices would have been charged, and assume a budgeted MOH rate of $7/DL dollar would have been used. (Round percentages to 2 decimal places, e.g. 52.75%.) Gross margin Gross margin percentage $ Job #45 Job #76 Job #82 %
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