Sparrow Company produces one product, a putter called GO-Putter. It uses a standard cost system anddetermines that it should take one hour of direct labor to produce one GO-Putter. The normalproduction capacity for this putter is 120,000 units per year. The total budgeted overhead at normalcapacity is 1,080,000 comprised of 360,000 of variable costs and 720,000 of fixed costs. The companyapplies overhead on the basis of direct labor hours.During the current year, it produced 76,600 putters, worked 98,400 direct labor hours, and incurredvariable overhead costs of 143,395 and fixed overhead costs of 602,095.Required:1.Predetermined Overhead Rate2.Compute the applied overhead for the year.3.Compute the total overhead variance.

Standard costing is an method where it was used to identify variances between the actual levels with…

Answered: Sparrow Company produces one product, a…

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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The Park Avenue Corporation currently makes a part required in its finished product. The company uses 2,170 units of this part annually. Park Avenue Corp has been approached by a vendor to provide this part for $13.08 each. The following cost information is provided Direct Materials per unit $5.26 Direct Labor per unit $7.30 Variable Factory Overhead per unit $2.50 Fixed Factory Overhead per unit $7.50 How much would Park Avenue Corporation save by having the vendor make the part, instead of making it themselves? Enter your answer rounded to the nearest whole number. Don't enter dollar signs or commas.
Factor Company estimates that producing a unit of product would require $8 per unit of direct materials and $24 per unit of direct labor. Factor Company normally applies overhead using a predetermined overhead rate of 150% of direct labor cost. Factor Company estimates incremental overhead of $16 per unit of product. An outside supplier offers to provide Factor Company with all the units it needs at a price of $46 per unit. Factor Company should choose to: Multiple Choice O O O Buy since the relevant cost to make it is $56. Make since the relevant cost to make it is $48. Buy since the relevant cost to make it is $48. Make since the relevant cost to make it is $32. Buy since the relevant cost to make it is $32.
Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows: Activity Cost Pool Activity 1 Activity 2 General Factory Total Multiple Choice $86.97 $70.79 Estimated Overhead Cost $14,487 64,800 12,736 $92,023 $11.24 Product A $81.20 Expected Activity Product B (Note: The General Factory activity cost pool's…
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Gadubhai
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