AccountingQuestion 3Barns Ltd. has three production departments: A, B, and C, and two servicedepartments: Stores and Maintenance. The company absorbs its overhead costson a machine hour basis in depts. A and B, and a labour hour basis in departmentC. The entity apportions indirect wages using labour hours worked in eachdepartment. The company has budgeted its production overhead costs for theforthcoming year as follows:Indirect wagesDepreciation of plantRentPowerCanteen costsPlant insuranceThe following information is also available:Labour HoursPlant valueFloor area (sq.m)Machine hoursEmployeesStoresrequisitionsKWH ('000)A9,000$130,00040,000MaterialDirect Labour ADirect Labour BDirect Labour C12,0007510,000Machine hours AMachine hours B$96,000376,000147,00072,000123,000117,500100BC7,000 16,000$70,000 $20,00030,00020,00015,000608,000605,000502,00060Stores Main.4,0004,000$5,000 $10,00010,0005,000nil8nil40 kilos @ $5 per kilo10 hours @ $15 per hour4 hours @ $14 per hour12 hours @ $16 per hour151010Required:(a) Prepare an overhead cost analysis for the period concerned, showing clearlythe bases of apportionment used.4,000122,000(b) Calculate the overhead absorption rates for each of the three productiondepartments. (Re-apportion the maintenance costs on the basis of machinehours.)10(c) Calculate the selling price of a unit of product (to the nearest $) based on theestimates below and using the absorption rates calculated in (b) above. Thecompany requires a profit of 20% of the selling price.

Barns Ltd. has 3 production departments and 2 service departments. The overhead cost of production…

Required: (a) Prepare an overhead cost analysis for the period concerned, showing clearly the bases of apportionment used. (b) Calculate the overhead absorption rates for each of the three production departments. (Re-apportion the maintenance costs on the basis of machine hours.) (c) Calculate the selling price of a unit of product (to the nearest $) based on the estimates below and using the absorption rates calculated in (b) above. The company requires a profit of 20% of the selling price. Material Direct Labour A Direct Labour B Direct Labour C Machine hours A Machine hours B 40 kilos@ $5 per kilo 10 hours @ $15 per hour 4 hours@ $14 per hour 12 hours @ $16 per hour 15 10

Required: (a) Prepare an overhead cost analysis for the period concerned, showing clearly the bases of apportionment used. (b) Calculate the overhead absorption rates for each of the three production departments. (Re-apportion the maintenance costs on the basis of machine hours.) (c) Calculate the selling price of a unit of product (to the nearest $) based on the estimates below and using the absorption rates calculated in (b) above. The company requires a profit of 20% of the selling price. Material Direct Labour A Direct Labour B Direct Labour C Machine hours A Machine hours B 40 kilos@ $5 per kilo 10 hours @ $15 per hour 4 hours@ $14 per hour 12 hours @ $16 per hour 15 10

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

Determine fixed and variable costs using the high-low method and prepare graph. E2.26 (LO 3) The controller of Furgee Industries has collected the following monthly expense data for use in analyzing the cost behaviour of maintenance costs. Total Maintenance Costs Total Machine Hours Month January February March April May June $2,500 3,000 3,600 4,500 3,200 4,900 300 350 500 690 400 700 Instructions a. Determine the fixed and variable cost components using the high-low method. b. Prepare a graph showing the behaviour of maintenance costs, and identify the fixed and variable cost components. Use 100-hour increments and $1,000 cost increments.
Required:i) Using the above information derive a cost function that can be used to predict the total production overheads cost using the high-low cost estimation method.
Which of the following statements is incorrect? O A. If MOH is overallocated to a job that has been sold, and the company calculates sales price by marking up job costs, the job will likely be underpriced. O B. The formula to arrive at the POHR is total budgeted manufacturing overhead divided by total estimated allocation base. O C. To calculate the increase to WIP for allocated MOH costs, the POHR is multiplied by the actual amount of the allocation based used by the cost object. D. "Number of units" is typically not an appropriate allocation base for MOH because the company's products do not consume equal overhead resources. If the over/underallocated MOH is fairly large and the majority of the units have not been sold, the balance in MOH should be prorated between WIP, FG, and COGS. O E.
I need the answer to 2.B-3.
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 G-09 19,400 $7 4 144 Machine depreciation Setup labor Materials handling Total Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow: G-35 3,880 $ 19 7 72 $184,760 52,380 41,904 $ 199,044 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. Compute the cost driver rates for the proposed system at Heidelberg.
Please answer in good accounting form. Thank you! <3
Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate compl 2. Compute the contribution margin per unit. [assume direct labor is a fixed cost] 3. Compute the contribution margin per welding hour. [assume direct labor is a fixed cost] 4. Assuming direct labor is a fixed cost: a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. b. What is the increase (decrease) in net operating income that would result from this plan over current operations? 5. Compute the contribution margin per unit. [assume direct labor is a variable cost] 6. Compute the contribution margin per welding hour. [assume direct labor is a variable cost] 7. Assuming direct labor is a variable cost: a. Determine the number of WVD drums (if any) that should be purchased and the number of WVD drums and/or bike frames (if any) that should be manufactured. b.…
As a new accountant of the company, you are provided with the following information related to KOKO: Product Annual production and sales unit Direct material cost per unit Direct labour cost per unit Machine hours per unit Selling price per unit Koko 5,500 RM50 RM35 3 hours RM150 The company is considering of changing the traditional method to the Activity Based Costing (ABC) method. In order to adopt ABC method the following information is required: Activity Cost Cost Driver Pool Expected overhead Expected use of drivers per product Other products 3,500 costs Коко (RM) No of purchase orders Machine hours Maintenance Maintenance hours Number of inspections Total Purchasing 4,000 37,500 Machining 16,500 8,000 1,500 147,000 43,000 3,500 Quality control 1900 1600 17,500 245,000 Required: a. If the company decided to use the Activity Based Costing (ABC) method, determine the cost per unit of KOKO. Based on your answer in (a), advise whether the company should change to ABC method. Support…
The cost accountant for M. Company wants to determine the cost of factory overhead. Based on observation and discussions with plant workers, you feel that five accounts are most relevant. Two are fixed- supervisory salaries and depreciation- and the remaining three are variable. Indirect labor is primarily used to move materials and varies with a number of moves. The largest component of utilities is electricity to run production machinery; which is driven by machine hours. Purchasing seems to be driven by the number of purchase orders. The accounts and their balances for the past six months are shown below: Indirect Plant and Labor Supervisory Equipment Cost Utilities Purchasing Salaries Depreciation July $14,250 $12,000 $38,200 $20,000 $6,500 Aug 15,800 10,600 35,400 23,000…
Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation.
Using the direct method, compute for the factory overhead rate of the D department if it apply overhead based on direct labor hours and budgeted direct labor hours for the period total to 75,000 hours. (SOLUTIONS MUST BE IN GOOD ACCOUNTING FORM. EXCEL FORM WOULD BE GREAT. ACCOUNT TITLES ON THE LEFT, AMOUNTS ON THE RIGHT. USE TABLE IF NECESSARY. AVOID PARENTHETICAL SOLUTIONS. THANKS, A LOT!)
1 For each of the following costs, identify the cost behavior as variable, mixed, or fixed: 1. Wages of assembly line workers 2. President's salary. 3. Plant utilities, 4. Sales force commissions 5. Shipping costs 6. Factory rent. 7. Research and development expenses 8. Property taxes 9. Advertising. 10. Supplies used in production