Problem 5.Sportsman, Inc. produces different sizes of basketballs. The following costs wereincurred during the year for PBA-sized basketball production.MaterialsLaborActual Factory overheadSelling expenses.General and Administrative expensesP81,250 (23% is indirect)87,500 (27% is indirect)70,000 (including indirect materialsand indirect labor)3,25023,250Sportsman applies overhead to production at 100% of direct labor cost. There wereno work in process at the end of the year and there were no finished goods inventoryat the beginning. 5,000 units were produced, and 90% of the units produced weresold.Required:1. Compute the prime costs2. Compute the conversion costs.3. Compute the total product costs4. Compute the total period costs5. Calculate the overhead variance and explain why it is favorable or unfavorable Problem 10Solville Motors Co. makes motorcycles. Management wants to estimateoverhead costs to plan its operations. A recent trade publication revealed thatoverhead costs tend to vary with machine hours. To check this, they collected thefollowing data for the past 12 months.44Month No.Machine Hours1752170316041905175IT6200716081509210101801117014512Cost AccountingOverhead CostsP 4,5004,2254,3215.2504,8005,1004,4504,2005,4754,7604,3253,975Requirements1. Use the high-low method to estimate the fixed and variable portion ofoverhead costs based on machine hours.2. If the plant is planning to operate at a level of 200 machine hours nextperiod, what would be the estimated overhead costs?3. Use the method of least square to estimate the fixed and variable portion ofoverhead costs based on machine hours.

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Answered: Problem 5. Sportsman, Inc. produces…

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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Custom Creations Furniture Company manufactures furniture at its Akron, Ohio, factory. Some of its costs from the past year include: Depreciation on sales office $ 9,800 Depreciation on factory equipment 16,700. Factory supervisor salary Sales commissions Lubricants used in factory equipment Insurance costs for factory Wages paid to maintenance workers Fabric used to upholster furniture Freight-in (on raw materials) Costs of delivery to customers Wages paid to assembly-line workers Lumber used to build product 50,200 23,400 3,800 21,400 115,600 10,900 3,200 9,200 A. $261,800. OB. $131,700. OC. $236,600. D. $325,100. 115,100 82,100 54,100 26,900 Utilities in factory Utilities in sales office Manufacturing overhead costs for Custom Creations Furniture Company totaled
Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B: Estimated Data Machining Assembly Total Manufacturing overhead $ 20,184,000 $ 841,000 $ 21,025,000 Direct labor hours 29,000 696,000 725,000 Machine hours 696,000 24,000 720,000 Job A Machining Assembly Total Direct labor hours 5 10 15 Machine hours 11 2 13 Job B Machining Assembly Total Direct labor hours 4 5 9 Machine hours 12 3 15 Required: 1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much manufacturing overhead cost would be applied to Job A? Job B? (Round your answers to the nearest whole dollar amount.) 2. Assume that Mason Company uses departmental…
2
Walton Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.00 /unit Direct labor $ 27.40 /unit Manufacturing overhead Variable $ 11.10 /unit Fixed ($18.80/unit for 1,900 units) $ 35,720 Variable selling and administrative expenses $ 10,360 Fixed selling and administrative expenses $ 15,500 The company produced 1,900 units and sold 1,400 of them at $182.00 per unit. Assume that the production manager is paid a 1 percent bonus based on the company’s net income. Required Prepare an income statement using absorption costing. Prepare an income statement using variable costing. Determine the manager’s bonus using each approach. Which approach would you recommend for internal reporting?
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The following is the total overhead cost at various levels of activity for McRoy Company: Total Overhead Cost $222,000 $246,000 $198,000 $174,000 February March April May Direct Labour Hours 80,000 90,000 70,000 60,000 The total overhead cost above consists of utilities, rent and maintenance. The breakdown of these costs at the 60,000 direct labour hour level of activity is: Utilities (variable) Rent (fixed) Maintenance (Mixed) Total overhead cost $48,000 $21,000 $105,000 $174,000 McRoy Company wants to separate the maintenance cost into its variable and fixed components. Required: (a) Estimate how much of the $246,000 of overhead cost in March was maintenance cost. (b) Using the high low method, construct a cost formula for the maintenance cost. (c) Assume that 209,000 direct labour hours are budgeted for the third quarter of the year, what would be the total overhead cost for the quarter?
Heidelberg Fabrication manufactures two products, G-09 and G-35: Units produced Direct materials cost per unit Machine-hours per unit Production runs per quarter Machine depreciation Setup labor Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow: Materials handling Total G-09 19,700 $ 7 4 G-35 3,940 $ 19 7 72 $ 106,380 53,190 42,552 $ 202,122 a. Overhead rate b. Machine depreciation b. Setup labor b. Materials handling Exercise 9-36 (Algo) Activity-Based Costing and Cost Driver Rates (LO 9-4) Required: a. Heidelberg currently applies overhead on the basis of machine-hours. What is the predetermined overhead rate for the quarter? Note: Round your answer to 2 decimal places. b. Heidelberg is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine-hours for machine depreciation, production runs for setup labor, and direct material dollars for materials handling.…
Maryville Incorporated incurred the following costs during June: Raw materials used Direct labor Manufacturing overhead, actual Selling expenses Administrative expenses Interest expense $ 331,000 652,000 448,000 267,000 194,000 91,000 During the month, 53,000 units of product were manufactured and 48,000 units of product were sold. On June 1, Maryville carried no Inventories. On June 30, there were no inventories other than finished goods. Required: a. Calculate the cost of goods manufactured during June and the average cost per unit of product manufactured. b. Calculate the cost of goods sold during June. c. Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the financial statements? d. Prepare a traditional (absorption) income statement for Maryville for the month of June. Assume that sales for the month was $2,448,000 and the company's effective income tax rate was 30%. Complete this question by entering your…
Wilmington Company has two manufacturing departments--Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year-Job Bravo. Estimated Data Manufacturing overhead costs Direct labor-hours Machine-hours Job Bravo Direct labor-hours Machine-hours Assembly $1,400,000 70,000 28,000 Assembly Fabrication 15 7 7 10 Fabrication Total $1,680,000 $3,080,000 Total 22 17 42,000 140,000 112,000 168,000 Required: 1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo? 2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied…
7. Reamer Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year: Direct materials.. Direct labor S1,000 S3,000 S4,000 $2,000 $400 S800 S1,000 Sales commissions Salary of production supervisor. Indirect materials. Advertising expense. Rent on factory equipment. Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be: $6.80 $6.00 $3.00 $3.40

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