Yarn Textiles manufactures laces used in shoes, boots, and sporting goods. The cost to manufacture shoe laces is $0.94 in direct materials, $0.79 in direct labour. Under normal capacity, the company estimates that total overhead is $0.77 per unit, based on normal capacity of 1,695,000 units. Consider the following independent scenarios: Actual units produced (units) Ending inventory (units) Required: 1. Calculate the total overhead over- or underapplied, if any. (Negative amounts should be shown with a minus sign.) Cost of goods sold Ending inventory Scenario A 1,895, 000 315, 000 2. Calculate the total COGS and ending inventory under each scenario. Scenario A Scenario B 1, 395, 000 315, 000 Scenario B

Yarn Textiles manufactures laces used in shoes, boots, and sporting goods. The cost to manufacture shoe laces is $0.94 in direct materials, $0.79 in direct labour. Under normal capacity, the company estimates that total overhead is $0.77 per unit, based on normal capacity of 1,695,000 units. Consider the following independent scenarios: Actual units produced (units) Ending inventory (units) Required: 1. Calculate the total overhead over- or underapplied, if any. (Negative amounts should be shown with a minus sign.) Cost of goods sold Ending inventory Scenario A 1,895, 000 315, 000 2. Calculate the total COGS and ending inventory under each scenario. Scenario A Scenario B 1, 395, 000 315, 000 Scenario B

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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Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $24.82 per unit, while product B has been assigned $13.58 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Activity Costs Cost Drivers Activity Driver Consumption Machine setup $ 158,000 Setup hours 2,000 Materials handling 112,000 Pounds of materials 16,000 Electric power 25,000 Kilowatt-hours 25,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: A B Number of units produced 5,000 10,000 Direct materials cost $ 32,000 $ 41,000 Direct labor cost $ 41,000 $ 38,000 Number of setup hours 100 200 Pounds of materials used 1,000 1,000 Kilowatt-hours 2,000 4,000 Required: 1. Use…
XYZ Ltd. is a manufacturing company that follows the cost allocation approach for overhead allocation. The company uses three cost pools for allocating overhead costs: Material Handling, Machine Maintenance, and Factory Utilities. Each cost pool has its own cost driver. For the current accounting period, the company incurred the following costs and activity levels: Material Handling Costs: $150,000 Cost Driver: Number of Material Orders - 2,500 orders Machine Maintenance Costs: $250,000 Cost Driver: Machine Hours - 10,000 hours Factory Utilities Costs: $200,000 Cost Driver: Direct Labor Hours - 5,000 hours Calculate the overhead allocation rate for each cost pool based on the given information. A) Material Handling: $60 per order, Machine Maintenance: $25 per hour, Factory Utilities: $40 per direct labor hour. B) Material Handling: $30 per order, Machine Maintenance: $25 per hour, Factory Utilities: $40 per direct labor hour. C) Material Handling: $60 per order, Machine…
Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): Basic Advanced Total Number of units produced and sold 20,000 10,000 30,000 $ 5,000,000 3,650,000 1,350,000 1,200,000 $3,000,000 $2,000,000 1,350,000 650,000 480,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 2,300,000 700,000 720,000 (20,000) Net operating income (loss) $4 $4 170,000 150,000 Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental…
Consider the following production and cost data for two products, X and Y, manufactured by Company. Product X Product Y Sales price per unit $52 $40 Direct materials cost per unit $18 $8 Direct labor hours per unit 1.5 1.0 Machine hours per unit 3.0 2.0 The labor rate is $10 per hour. Variable overhead is $2 per direct labor hour. The company can hire sufficient labor for any production level. The company has 15,000 machine hours available each period. There is unlimited demand for each product. Assuming a company has achieved a reasonable level of cost accuracy, what is the most important determinant of whether cost information should be even more accurate?
A company makes two products 1 and 2. The finishing activity pool has estimated manufacuring costs of $84,399 and the cost drivers for Product 1 is 200 and 500 for Product 2. The assembling activity pool has estimated costs of $65,366 and the cost drivers for Product 1 is 350 and 275 for Product 2. Direct labor hours for Product 1 is 323 and 371 for Product 2. What is the total manufacturing overhead rate to be used under traditional cost accounting?
Zeta Inc. had net income of $918,000 based on variable costing. Beginning and ending inventories were 56,800 units and 55,600 units, respectively. Assume the fixed overhead per unit was $2.15 for both the beginning and ending inventory. What is net income under absorption costing? A.$797,170 B.$912,840 C.$1,038,830 D.$915,420 E.$918,000
Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $9.00 per pound Direct labor: 3 hours at $15 per hour Variable overhead: 3 hours at $6 per hour Total standard variable cost per unit The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses $36.00 45.00 18.00 $ 99.00 Fixed Cost per Month $ 210,000 $ 120,000 Variable Cost per Unit Sold $ 13.00 $ 4.00 The planning budget for March was based on producing and selling 26,000 units. However, during March the company actually produced and sold 31,000 units and incurred the following costs: a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production. b.…
The following are standard costs related to a product of Jacobs, SRL: Inputs: Unit of Input Units per item Price or rate Direct Materials: square feet 80 $22/square foot Direct Labor: direct labor hours 24 $38/direct labor hour Variable Overhead: direct labor hours $49/direct labor hour The company applies variable overhead on the basis of direct labor hours. In April, the following results were reported: Actual output: 506 items Raw Materials used: 45,684 square feet Raw Material purchased: 42,335 square feet Actual direct labor hours: 14,168 hours Actual cost of raw materials purchased: $973,705 Actual direct labor cost: $609,224 Actual variable overhead cost: $665,896 The direct material purchases variance is computed when the materials are purchased. Determine each of the following variances and whether they are favorable or unfavorable: Part 1: Direct Material quantity variance: 114,488 Unfavorable 114,488 Favorable 83,145 Favorable 83, 145…
Skolnick Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.00 Direct labor $ 4.20 Variable manufacturing overhead $ 1.30 Fixed manufacturing overhead $ 126,000 Sales commissions $ 1.50 Variable administrative expense $ 0.35 Fixed selling and administrative expense $ 41,400 Required: a. If 9,000 units are produced, what is the total amount of direct manufacturing cost incurred? (Do not round intermediate calculations.) b. If 9,000 units are produced, what is the total amount of indirect manufacturing costs incurred?
The company has the following financial information:Manufacturing overhead- P30,101,800Increase in raw materials- P2,430,000Decrease in work in process- P590,000Increase in finished goods- P1,320,400Manufacturing overhead amounts to 50% of direct labor, and the direct labor and manufacturing overhead combined equal 50% of the total cost of manufacturing.How much is the cost of goods sold? Choices: • P181,200,800 • P179,880,400 • P177,590,800 • P180,020,800
Required information [The following information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 4 pounds at $9.00 per pound Direct labor: 3 hours at $15 per hour Variable overhead: 3 hours at $6 per hour Total standard variable cost per unit The company also established the following cost formulas for its selling expenses: Advertising Sales salaries and commissions Shipping expenses $ 36.00 45.00 18.00 $ 99.00 Fixed Cost per Month $ 210,000 $ 120,000 Variable Cost per Unit Sold $ 13.00 $ 4.00 The planning budget for March was based on producing and selling 26,000 units. However, during March the company actually produced and sold 31,000 units and incurred the following costs: Variable overhead rate variance a. Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this…