QUESTION 3The Fleming Company of Anguilla (FCA) designs and produces automotive parts. In 2019, actualvariable manufacturing overhead is $280,000. FCA's simple costing system allocates variablemanufacturing overhead to its three customers based on machine-hours and prices its contractsbased on full costs. One of its customers has regularly complained of being chargednoncompetitive prices, so FCA's controller Matthias Hodge realizes that it is time to examine theconsumption of overhead resources more closely. He knows that there are three main departmentsthat consume overhead resources: design, production, and engineering. Interviews with thedepartment personnel and examination of time records yield the following detailed infomation:Usage of Cost of Drivers by CustomerContractManufacturingGumbsConnorRichardsonOverhead in 2019MotorsMotorsAutoDepartmentDesignCost DriverCAD design hours$ 35,000150250100Engineering hours25,000220,000$280,000Production1301002703003,7001,000EngineeringTotalMachine hoursRequiredi.Compute the manufacturing overhead allocated to each customer in 2019 using thesimple costing system that uses machine-hours as the allocation base.i. Compute the manufactring overhead allocated to each customer in 2019 usingdepartment-based manufacturing overhead rates.Using your results from requirements 1 and 2 above, which customer do you think wascomplaining about being overcharged in the simple system? Which customer(s) will beunhappy? How would you respond to these concems if raised by those customers?111.iv. How else might FCA use the information available from its department-by-departmentanalysis of mamufacturing overhead costs?FCA's managers are wondering if they should further refine the department-by-department costing system into an ABC system by identifying different activities withineach department. Discuss the two (2) advantages and two (2) disadvantages of an ABCsystem, if it is to be implemented in this context?V.

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Required i. Compute the manufacturing overhead allocated to each customer in 2019 using the simple costing system that uses machine-hours as the allocation base. Compute the manufacturing overhead allocated to each customer in 2019 using department-based manufacturing overhead rates. i.

Required i. Compute the manufacturing overhead allocated to each customer in 2019 using the simple costing system that uses machine-hours as the allocation base. Compute the manufacturing overhead allocated to each customer in 2019 using department-based manufacturing overhead rates. i.

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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17.) In a job order system, the ending Work in Process account balance should equal the sum of: A.) the Pokémon from all nine regions B.) all manufacturing costs for the period dloun C.) the open job cost sheets D.) the over or under-applied balance in Manufacturing Overhead for the period
All the following statements about multiple predetermined overhead rates are correct , EXCEPT : a. They are calculated for each department by dividing total estimated manufacturing overhead cost by total actual units of the allocation base . b. They are calculated at the beginning of the accounting period once the actual amount of manufacturing overhead is known . c. They improve job - order costing's accuracy accounting for costs . d .All the given answers are correct . e . They are based on estimated total manufacturing overhead costs
1. Determine the total estimated overhead cost for each of the producing departments after allocating the cost of the service department. A. Using employee headcount as the allocation base. B. Using occupied space as the allocation base. C. Using productive capacity as the allocation base. D. Using the 3-year average use as the allocation base.
When calculating the predetermined manufacturing overhead rate, what is the correct basis of calculation? a.Estimated overhead costs divided by the estimated amount of the cost driver or allocation base b.Estimated amount of the cost driver divided by the estimated total overhead costs c.Estimated overhead costs divided by the number of days in a year d.Actual overhead costs of the prior year divided by the actual amount of the cost driver or allocation base
1. How much overhead would have been charged to the company’s Work-in-Process account during the year? 2. Comment on the appropriateness of the company’s cost drivers (i.e., the use of machine hours in Machining and direct-labor cost in Assembly).
Jackson Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. (Click the icon to view the costs.) Requirements 1. 2. 3. Compute Jackson's predetermined overhead allocation rate. Prepare the journal entry to allocate manufacturing overhead. Post the manufacturing overhead transactions to the Manufacturing Overhead T-account. Is manufacturing overhead underallocated or overallocated? By how much? 4. Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Does your entry increase or decrease Cost of Goods Sold? Print Allocated overhead to WIP Done - X Data table At the beginning of 2024, the company expected to incur the following: Manufacturing overhead costs Direct labor costs $880,000 1,540,000 Machine hours 80,000 hours At the end of 2024, the company had actually incurred: Direct labor costs Depreciation on manufacturing plant and equipment Property taxes on plant…
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Predetermined overhead rates are calculated: a. first and then multiplied by total actual units of the allocation base to compute the applied manufacturing overhead costs. b. based on actual total manufacturing overhead costs C. by dividing total estimated manufacturing overhead cost by total actual units of the allocation base. d. none of the given answers is correct. e. at the end of the accounting period once the actual amount of manufacturing overhead is known.
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Arensky Company uses normal costing to account for overhead in its job costing system. There are departments in the company: Designing and Machining. The Designing Dept. is labor intensive; the Machining Dept. is machine intensive. (OH- Overhead; DLH = Direct Labor Hours; MH = Machining Hours.) The budget for 2019 is as follows: Actual results are as follows: a. b. C. Est. OH Est. DLH Est. MH d. Actual OH Actual DLH Actual MH Designing $2,000,000 40,000 hours 20,000 hours Designing $2,100,000 41,500 hours 19,800 hours Machining $5,600,000 10,000 hours 70,000 hours Machining $5,650,000 11,000 hours 72,000 hours Using the most logical allocation base, calculate the OH Allocation Rate for eac department. Be sure to state your final answer in proper units. For each department, calculate how much OH is allocated. For each department, give the journal entry to record over- or under-allocated overhead. Why is the Normal Costing method preferred to the Actual Costing method? uirements
2. Austin Electronics manufactures two large-screen television models: the Royale, which sells for $1,600, and a new model, the Majestic, which sells for $1,300. Few per unit cost data are given: Traditional Costing DM Royale $850 Majestic $570 DL ($20 per hour) MOH ($38 per DLH) $140 $248 $100 $190 In 2017, Austin manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the total direct labor hours (200,000) for the two models. Management is considering phasing out the Royale model (comparatively low profit) and increasing the production of the Majestic model Before finalizing its decision, management asks Austin's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2017. Est. Overhead Activity | Level 40,000 18,000…
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.