Orange, Incorporated has identified the following cost drivers for its expected overhead costs for the year: Expected Quantity 250 Expected Overhead Item Cost Cost Driver Number of setups Setup costs Ordering costs Maintenance $ 50,000 30,000 100,000 1,500 2,000 4,000 Number of orders Machine hours 20,000 $ 200,000 Power Kilowatt hours Total Overhead Total direct labor hours budgeted = 2,000 hours. The following actual data applies to one of the products completed during the year: Product X $ 5,000 $ 3,000 Direct materials Number of setups 5 Direct labor Number of orders 50 Machine hours Units completed Direct labor hours 100 50 100 Kilowatt hours 500 If Orange, Incorporated uses direct labor hours to assign overhead, the unit product cost for Product X will be:

Orange, Incorporated has identified the following cost drivers for its expected overhead costs for the year: Expected Quantity 250 Expected Overhead Item Cost Cost Driver Number of setups Setup costs Ordering costs Maintenance $ 50,000 30,000 100,000 1,500 2,000 4,000 Number of orders Machine hours 20,000 $ 200,000 Power Kilowatt hours Total Overhead Total direct labor hours budgeted = 2,000 hours. The following actual data applies to one of the products completed during the year: Product X $ 5,000 $ 3,000 Direct materials Number of setups 5 Direct labor Number of orders 50 Machine hours Units completed Direct labor hours 100 50 100 Kilowatt hours 500 If Orange, Incorporated uses direct labor hours to assign overhead, the unit product cost for Product X will be:

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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Patel and Sons Incorporated uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs for the year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (CGS) using the following percentages: 10%, 20%, and 70%, respectively. Provide the proper journal entry to close out the…
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 51,600 machine hours per year, which represents 25,800 units of output. Annual budgeted fixed factory overhead costs are $258,000 and the budgeted variable factory overhead cost rate is $2.50 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 19,500 units, which took 40,600 machine hours. Actual fixed factory overhead costs for the year amounted to $251,600 while the actual variable overhead cost per unit was $2.40. Assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (CGS) using the following percentages: 10%, 20%, and 70%, respectively. Provide the proper journal entry to close out the…
Craftmore Machining reports the following budgeted overhead cost and related data for this year. Activity Assembly Product design Budgeted Activity Usage 13,000 Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Electricity 1,000 10,500 420 Setups Setup Total Budgeted Cost $ 409,500 63,000 21,000 52,500 $ 546,000 Required: 1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 13,000 direct labor hours. 2. Job 31 used 220 direct labor hours and Job 42 used 500 direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part 1. 3. Compute an activity rate for each activity using activity-based costing. 4. Allocate overhead costs to Job 31 and Job 42 using activity-based costing. Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Setups Activity Usage Job 31 220 28 52 4 Job 42 500 34 62 6 Complete this question by entering your…
Curry Company has two divisions, Eastern Division and Western Division. Curry Company has been allocating overhead based on direct labor hours. For the most recent year, the predetermined overhead rate was $70 per direct labor hour. An activity-based costing analysis of Curry's operations has identified three different cost pools. Data about the cost drivers for each pool for the most recent year given below. Cost Pool Number of Events per Year Cost Pool A B 2,000 $100,000 1,000 200,000 50,000 $350,000 с 50 Total The following data relate to cost driver event activity within the two divisions during the most recent year. Eastern Division Western Division Total 500 2,000 800 1,000 20 50 3,000 5,000 Cost Driver A events Cost Driver B events Cost Driver C events Direct labor hours 1,500 200 30 2,000 Which of the following statements is correct? If the activity-based costing system had been used in the most recent year in place of the traditional overhead allocation technique, Select one:…
Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity $138,000 Number of setups 10,200 Number of orders 92,400 Machine hours 18,480 Receiving hours phones with the following expected activity demands: Setting up equipment Ordering materials Machining Receiving Silven produces two models of cell Model X 5,000 80 200 6,600 385 Units completed Number of setups Number of orders Machine hours Receiving hours Required: Model Y 10,000 40 400 4,950 770 120 600 11,550 1,155
Patel and Sons, Inc., uses a standard cost system to apply overhead costs to units produced. Practical capacity for the plant is defined as 53,100 machine hours per year, which represents 26,550 units of output. Annual budgeted fixed overhead costs are $265,500 and the budgeted variable overhead cost rate is $3.00 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 20,500 units, which took 42,100 machine hours. Actual fixed overhead costs for the year amounted to $259,400 while the actual variable overhead cost per unit was $2.90. Required information a. Based on the information provided above, what was the variable overhead spending variance for the year? (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) b. What was the variable overhead efficiency variance for the year? (Do not round intermediate calculations. Round your final answer…
Sherman Manufacturing Company currently manufactures a component used in one of its products. The annual production costs for 11,300 components are as follows: Material cost Labor cost Overhead Batch-level set-up costs for year Product-level manager's salary Allocated facility-level costs $ 7 per unit $ 3 per unit $ 1 per unit $ 5,700 $ 17,700 $ 11,700 An outside company has offered to supply 11,300 units of the component for $14.40 each. If the company outsources the component, it will be able to rent out the idle factory space for $2,000 per month but will not terminate the product manager. Required: a. Which items are not relevant to this outsourcing decision? b. Identify any opportunity costs associated with this decision. c. Prepare a quantitative analysis that indicates whether the component should be outsourced. Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare a quantitative analysis that indicates whether the component…
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,100 machine hours per year, which represents 25,050 units of output. Annual budgeted fixed factory overhead costs are $250,500 and the budgeted variable factory overhead cost rate is $2.00 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,500 units, which took 39,100 machine hours. Actual fixed factory overhead costs for the year amounted to $246,100 while the actual variable overhead cost per unit was $1.90. Based on the information provided above, provide the appropriate journal entries: (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods Sold (CGS) account at the end of the period. (Do not round…
Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: Overhead Item Expected Cost Cost Driver Expected Quantity Setup costs $ 52,000 Number of setups 250 Ordering costs 34,000 Number of orders 1,500 Maintenance 108,000 Machine hours 2,000 Power 22,000 Kilowatt hours 4,000 Total Overhead $ 216,000 Total direct labor hours budgeted = 2,000 hours. The following actual data applies to one of the products completed during the year: Product X Direct materials $ 5,400 Number of setups 5 Direct labor $ 3,400 Number of orders 50 Units completed 100 Machine hours 50 Direct labor hours 100 Kilowatt hours 500 If Orange, Inc. uses direct labor hours to assign overhead, the unit product cost for Product X will be: Multiple Choice $76.00. $86.00. $96.00. $106.00. $196.00.
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment Number of setups Ordering costs Number of orders Machine costs Receiving Direct materials Direct labor Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Units completed Direct labor hours Number of setups Number of orders $627,000 481,000 16,200 6,400 370 5,800 24,900 3,700 The company's normal activity is 7,900 direct labor hours. Machine hours Receiving hours Required: Model A Model B $482,510 372,000 864,000 410,000 Receiving hours Model A Machine hours $ del B Model B Unit Cost $836,000 497,000 8,500 1,500 240 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent. 12,800 18,300 6,300 610 18,600 43,200 10,000 2. Determine the unit cost for…
The total factory overhead for Landen Company is budgeted for the year at $675,000. Landen manufactures two drapery products: sheer curtains and insulated curtains. These products each require 6 direct labor hours (dlh) to manufacture. Each product is budgeted for 7,500 units of production for the year. What would the factory overhead allocated per unit for insulated curtains using the single plantwide factory overhead rate be? a.$15.00 b.$270.00 c.$45.00 d.$90.00
S Craftmore Machining reports the following budgeted overhead cost and related data for this year. Budgeted Activity Usage Budgeted Cost $ 555,750 85,500 28,500 Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) 13,000 1,500 11,400 570 71,250 Setups $ 741,000 Activity Assembly Product design Electricity Setup Total Required: 1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 13,000 direct labor hours. 2. Job 31 used 320 direct labor hours and Job 42 used 680 direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part 1. 3. Compute an activity rate for each activity using activity-based costing. 4. Allocate overhead costs to Job 31 and Job 42 using activity-based costing. Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Setups Required 1 Required 2 Activity Usage Job 31 Required 3 320 43 56 6 Complete this question by…