Job 206 Item: 50 backhoe buckets Direct Materials Direct Materials Price Materials: Quantity 105 Amount Steel (tons) $1,200 $126,000 Steel components (pieces) 630 4,410 Total materials $130,410 Direct Labor Rate Direct Labor Hours Direct labor: Amount $ 9,000 Foundry Welding $22.50 400 550 27.00 14,850 Shipping 3,240 180 18.00 $ 27,090 Total direct labor 1,130 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead (200% of direct labor dollars) $ 54,180 $ 211,680 200% $27,090 Total cost Total units 50 Unit cost (rounded) $4,233.60 (Continued) Job 228 Item: 75 backhoe buckets Direct Matertals Quantity Direct Materlals Price Amount Materials: Steel (tons) $1,100 $214,500 195 Steel components (pieces) Total materials 945 6,615 $221,115 Direct Labor Direct Labor Rate Amount Hours Direct labor: $ 16,875 Foundry $22.50 750 Welding 28,350 1,050 27.00 Shipping 375 18.00 6,750 $ 51,975 Total direct labor 2,175 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead $ 103950 $ 377,040 (200% of direct labor dollars) $51,975 200% Total cost Total units 75 Unit cost $5,027.20 Management is concerned with the increase in unit costs over the months from October to December. To understand what has occurred, management interviewed the purchasing manager and quality manager. Purchasing Manager: Prices have been holding steady for our raw materlals during the first half of the year.I found a new suppler for our bulk steel that was willing to offer a better price than we recelved In the past. I saw these lower steel prices and Jumped at them, knowing that a reduction In steel prices would have a very favorable Impact on our costs. Quality Manager: Something happened around mid-year. All of a sudden, we were experlencing problems with respect to the quallty of our steel. As a result, we've been having all sorts of problems on the shop floor In our foundry and welding operation. 1. Analyze the two job cost sheets and identify why the unit costs have changed for the backhoe buckets. Complete the following schedule to help in your analysis: Input Quantity per Unit-Job 228 Input Quantity per Unit-Job 206 Item Steel Foundry labor Welding labor -How would you interpret what has happened in light of your analysis and 2. the interviews?

Job 206 Item: 50 backhoe buckets Direct Materials Direct Materials Price Materials: Quantity 105 Amount Steel (tons) $1,200 $126,000 Steel components (pieces) 630 4,410 Total materials $130,410 Direct Labor Rate Direct Labor Hours Direct labor: Amount $ 9,000 Foundry Welding $22.50 400 550 27.00 14,850 Shipping 3,240 180 18.00 $ 27,090 Total direct labor 1,130 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead (200% of direct labor dollars) $ 54,180 $ 211,680 200% $27,090 Total cost Total units 50 Unit cost (rounded) $4,233.60 (Continued) Job 228 Item: 75 backhoe buckets Direct Matertals Quantity Direct Materlals Price Amount Materials: Steel (tons) $1,100 $214,500 195 Steel components (pieces) Total materials 945 6,615 $221,115 Direct Labor Direct Labor Rate Amount Hours Direct labor: $ 16,875 Foundry $22.50 750 Welding 28,350 1,050 27.00 Shipping 375 18.00 6,750 $ 51,975 Total direct labor 2,175 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead $ 103950 $ 377,040 (200% of direct labor dollars) $51,975 200% Total cost Total units 75 Unit cost $5,027.20 Management is concerned with the increase in unit costs over the months from October to December. To understand what has occurred, management interviewed the purchasing manager and quality manager. Purchasing Manager: Prices have been holding steady for our raw materlals during the first half of the year.I found a new suppler for our bulk steel that was willing to offer a better price than we recelved In the past. I saw these lower steel prices and Jumped at them, knowing that a reduction In steel prices would have a very favorable Impact on our costs. Quality Manager: Something happened around mid-year. All of a sudden, we were experlencing problems with respect to the quallty of our steel. As a result, we've been having all sorts of problems on the shop floor In our foundry and welding operation. 1. Analyze the two job cost sheets and identify why the unit costs have changed for the backhoe buckets. Complete the following schedule to help in your analysis: Input Quantity per Unit-Job 228 Input Quantity per Unit-Job 206 Item Steel Foundry labor Welding labor -How would you interpret what has happened in light of your analysis and 2. the interviews?

Name: RIRA Company makes attachments such as backhoes and grader and bulldoz
Uploaded: 2024-03-20T06:32:49.000Z
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Description: RIRA Company makes attachments such as backhoes and grader and bulldozer blades for construction equipment. The company uses a job order cost system. Management is concerned about cost performance and evaluates the job cost sheets to learn more about

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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