Prudoe Compounds produces a variety of chemicals used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compounds includes normal spoilage cost in its predetermined OH rate. For 2013, Prudoe Compounds estimated the following: Overhead costs, other than spoilage Estimated spoilage cost Estimated sales value of spoiled materials Estimated direct labor hours $600,000 50,000 20,000 40,000 a. Prudoe Compounds applies overhead based on direct labor hours. Calculate the predetermined OH rate for 2013. b. For a batch of chemicals mixed in May 2013, the firm experienced normal spoilage on Job #788. The cost of the spoiled material amounted to $1,730 and the company estimated the salvage value of those materials to be $496. Journalize the entry for the spoilage.

Prudoe Compounds produces a variety of chemicals used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compounds includes normal spoilage cost in its predetermined OH rate. For 2013, Prudoe Compounds estimated the following: Overhead costs, other than spoilage Estimated spoilage cost Estimated sales value of spoiled materials Estimated direct labor hours $600,000 50,000 20,000 40,000 a. Prudoe Compounds applies overhead based on direct labor hours. Calculate the predetermined OH rate for 2013. b. For a batch of chemicals mixed in May 2013, the firm experienced normal spoilage on Job #788. The cost of the spoiled material amounted to $1,730 and the company estimated the salvage value of those materials to be $496. Journalize the entry for the spoilage.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The Enhanced Products Division of Forrest Industries makes ceramic pots that are used to hold large decorative plants. During 2013, the division produced 10,000 pots and incurred the following costs: unit-level material costs (10,000@ $15) $15,000 unit-level labor costs (10,000@ $20) $200,000 Unit-level overhead costs (10,000 @16) $160,000 Depreciation expenses on equipment* $30,000 Other manufacturing overhead ** $36,000 *The equipment was purchased for $150,000 and has a current book value of $120,000, remaining useful life of four years, and a zero salvage value. If the company does not use the equipment, it can be leased for $8,000 per year.**Includes supervisors' salaries and rent for manufacturing plant.The division is considering replacing the equipment used to manufacture its ceramic pots. Replacement equipment can be purchased at a price of $200,000. The new equipment, which is expected to last 4 years and have a salvage value of…
Al-Firdaus Co. had the following information during 2019: Total Paint Costs R.O. 27,000 Month Factory Machine Hours January 15,900 February 24,200 17,400 March 24,300 16,600 April 27,100 15,600 May 24,400 17,600 June 27,200 16,400 Using the High-Low method, the total fixed costs is: Select one: О а. 600 O b. 800 O . None of the answers are correct O d. 1,200 O e. 1,600
Otto Enterprises produces wind turbines. Use the list below to calculate the percent of appraisal cost of the total cost of quality. Equipment maintenance. Inspecting raw materials Product recalls Scrap of defective products Training lean business practices Warranty claims Total cost of quality $ 31,500 45,000 18,500 12,500 26,000 16,500 $ 150,000
LogicCo is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Spoiled units are disposed of at zero net disposal value. LogicCo uses the weighted-average method of process costing. Summary data for September 2020 are: (Click the icon to view the data.) Read the requirements. Requirement 1. For each cost category, compute equivalent units. Show physical units in the first column of your schedule. Enter the physical units in first, then calculate the equivalent units. Flow of Production Work in process beginning Started during current period To account for Completed and transferred out during current period Normal spoilage Abnormal spoilage Work in process, ending Accounted for Work done to date Physical Units Requirements 1. For each cost category, compute…
(Management Accounting) Davidson Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows: Direct materials $108,000 Direct labor 156,000 Variable factory overhead 70,000 Fixed factory overhead 168,000 Total costs $502,000 Of the fixed factory overhead costs, $72,000 are avoidable. Assuming there is no other use for the facilities. What is the highest price Davidson Company should be willing to pay for 5,000 units of the part? A) $264,000 B) $334,000 C) $406,000 D) $502,000
Snipe Company has been purchasing a component, Part Q, for $19.20 a unit. Snipe is currently operating at 70% of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q, determined by absorption costing methods, is estimated as follows: Direct materials $11.50 Direct labor $4.50 Variable factory overhead $1.12 Fixed factory overhead $3.15 Total $20.27 Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.
Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not "ideal" at this point, but the management is working toward that as a goal. At present, the company uses the following standards. Materials Item Per unit Cost Metal 1 lb. 63¢ per lb Plastic 12 oz. $1.00 per Ib. Rubber 4 oz. 88¢ per Ib. Direct labor Item Per unit Cost Labor 15 min. $9.00 per hr. Predetermined overhead rate based on direct labor hours = $424 The January figures for purchasing, production, and labor are: The company purchased 228,200 pounds of raw materials in January at a cost of 79¢ a pound. Production used 228,200 pounds of raw materials to make 115,000 units in January. Direct labor spent 18 minutes on each product at a cost of $8.80 per hour. Overhead costs for January totaled $54,597 variable and $72,000 fixed. Answer the following questions about standard costs. Your answer is partially correct. What is the materials price variance? (Round…
Big Company manufactures electric drills to the exact specifications of various customers. During April 2020, Job 403 for the production of 1,100 units was completed at the following costs per unit: The question is If the spoilage is attributable to Job 202 only, what is the unit selling price of the good units? (round off to the nearest centavo)
8
None
TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 66,000 units last year: A B 1 Direct materials $528,000 2 Direct labor 132,000 3 Variable MOH 198,000 4 Fixed MOH 462,000 5 Total manufacturing cost for 66,000 units $1,320,000 Another company has offered to sell TechSystems the switch for $11.00 per unit. If TechSystems buys the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. TechSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Direct materials $8.00 $0.00 $8.00 Direct labor 2.00 0.00 2.00…