it does yield good information about production-specific costs.REVIEW QUESTIONSQuestion oneDestin products uses a job costing system with two direct cost categories (directmaterial and direct manufacturing labor) and one manufacturing overhead cost pool.Destin allocates manufacturing overhead costs using direct manufacturing labor costs.Destin provides the following information:Budgeted for 20071,500,0001,000,0001,750,000Direct material costsDirect manufacturing labor costsManufacturing overhead costRequired1. Compute the actual and budgeted manufacturing overhead rates for 20072. During March, the job cost record for job 626 contained the followinginformation:Direct materials usedshs. 40,000. Direct manufacturing labor costsshs. 30,000Compute the cost of job 626 using (a) actual costing and (b) normal costing3. At the end of 2007, compute the under or over allocated manufacturing overheadunder normal costing. Why is there no under or over allocated overhead underactual costing?Question twoDC Limited is an engineering company which uses job costing to attribute costs toindividual products and services provided to its customers. It has commenced theCost and Management Accounting 1MachiningAssemblyFinishingStoresMaintenanceTopic Five:Job onder Costingpreparation of its fixed production overhead cost budget for 2001 and has identified thefollowing costs:StoresMaintenance(shs.000)600250150100801.180The stores and maintenance departments are production service departments. Ananalysis of the services they provide indicates that their costs should be apportionedaccordingly:Machine hoursLabor hoursThe number of machine and labor hours budgeted for 2001 is:Assembly4 00030 000Machining Assembly Finishing Stores Maintenance30%10%40%20%55%20%20%Machining50 00010 000Actual for 20071,450,000980,0001,862,000Direct materials costing shs 2400Direct labour costing shs.1500and requires:Machine LabourhourshoursMachining department 45Assembly department 5Finishing department 4Page 795%Requirements:(a) Calculate appropriate overhead absorption rates for each production departmentfor 2001.Cost and Management Accounting I(b) Prepare a quotation for job number XX34, which is to be commenced early in2001, assuming that it has:101512Finishing5 00020 000Page 80

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REVIEW QUESTIONS Question one Destin products uses a job costing system with two direct cost categories (direct material and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. Destin provides the following information: Budgeted for 2007 1,500,000 1,000,000 1,750,000 Direct material costs Direct manufacturing labor costs Actual for 2007 1,450,000 980,000 1,862,000 Manufacturing overhead cost Required 1. Compute the actual and budgeted manufacturing overhead rates for 2007 2. During March, the job cost record for job 626 contained the following information: • Direct materials used shs. 40,000 Direct manufacturing labor costs shs. 30,000 Compute the cost of job 626 using (a) actual costing and (b) normal costing 3. At the end of 2007, compute the under or over allocated manufacturing overhead under normal costing. Why is there no under or over allocated overhead under

REVIEW QUESTIONS Question one Destin products uses a job costing system with two direct cost categories (direct material and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. Destin provides the following information: Budgeted for 2007 1,500,000 1,000,000 1,750,000 Direct material costs Direct manufacturing labor costs Actual for 2007 1,450,000 980,000 1,862,000 Manufacturing overhead cost Required 1. Compute the actual and budgeted manufacturing overhead rates for 2007 2. During March, the job cost record for job 626 contained the following information: • Direct materials used shs. 40,000 Direct manufacturing labor costs shs. 30,000 Compute the cost of job 626 using (a) actual costing and (b) normal costing 3. At the end of 2007, compute the under or over allocated manufacturing overhead under normal costing. Why is there no under or over allocated overhead under

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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Predetermined Factory Overhead Rate Exotic Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Engine parts Shop direct labor Shop and repair equipment depreciation Shop supervisor salaries Shop property taxes Shop supplies $953,500 696,000 31,700 88,000 16,000 12,200 Advertising expense 19,100 Administrative office salaries 82,000 Administrative office depreciation expense 10,500 Total costs and expenses $1,909,000 The average shop direct labor rate is $24.00 per hour. Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent. $ per direct labor hour
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EXERCISES Variable costing versus absorption costing Yellowstone Fabricators uses a process cost system and applies actual factory overhead to work in process at the lend of the month. The following data came from the records for March: E10-1 L01 Direct materials.... $200,000 Direct labor. $100,000 Variable factory overhead.. $ 80,000 Fixed factory overhead. $ 60,000 Similar to $ 40,000 25,000 Recall and Review 1 Selling and administrative expenses Units produced... Units sold... 20,000 Selling price per unit... $25 There were no beginning inventories and no ending work in process inventory. From the information presented, compute the following: 1. Unit cost of production under absorption costing and variable costing. 2. Cost of the ending inventory under absorption costing and var- iable costing. Comparative income statements-variable and absorption costing Using the information presented in E10-1, prepare comparative income statements for March (a) under absorption costing and (b)…
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Production and cost data Production and sales units Selling price (per unit) Materials (per unit) Labor (per unit) Manufacturing overheads Dept. A Standrad 192000 24000 $15 1.7 4.3 Dept. B Designer wear Number of machine set-ups 4 Marketing overheads $50 8 14.2 24 Engineering and PC Marketing and CS 745200 1296000 Use single-rate; direct method to allocate engineering and marketing overheads Engineering overheads include machine setting ($460,800) and inspection ($284,400) activities. Marketing involves channel ($496,000) and branding ($800,000) activities. The inspection and channel costs are driven by the number of units produced & sold. Computing product costs and profits under conventional and ABC approaches
Predetermined Factory Overhead Rate Road Runner Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Engine parts Shop direct labor Shop and repair equipment depreciation Shop supervisor salaries Shop property taxes Shop supplies Advertising expense Administrative office salaries Administrative office depreciation expense Total costs and expenses The average shop direct labor rate is $22 per hour. $1,054,900 770,000 39,700 110,400 20,000 15,400 21,100 90,700 11,600 $2,133,800 Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent. per direct labor hour
Job Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances $59,100 17,700 41,400 25,400 $143,600 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages…
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