Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
6th Edition
ISBN: 9780134486857
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 19, Problem 36AP
Blanchette Plant Service completed a special landscaping job for Kerry Company. Blanchette uses ABC and has the following predetermined
The Kerry job included $750 in plants; $1,300 in direct labor; one design; and 30 plants.
Requirements
- 1. What is the total cost of the Kerry job?
- 2. If Kerry paid $3,540 for the job, what is the operating income or loss?
- 3. If Blanchette desires an operating income of 30% of cost, how much should the company charge for the Kerry job?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Using ABC in a service company
Blanchette Plant Service completed a special landscaping job for Kerry Company. Blanchette uses ABC and has the following predetermined overhead allocation rates:
The Kerry job included $750 in plants; $1,300 in direct labor; one design; and 30 plants.
Requirements
What is the total cost of the Kerry job?
If Kerry paid $3,540 for the job, what is the operating income or loss?
If Blanchette desires an operating income of 30% of cost, how much should the company charge for the Kerry job?
Franklin Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials
and labor costs are as follows.
Expected Costs
Direct labor
Direct materials
Fringe Benefits:
Home
1
2
3
Total
Indirect Materials:
Assume Franklin needs to allocate two major overhead costs ($67,200 of employee fringe benefits and $18,080 of Indirect materials
costs) among the three jobs.
Required
Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house.
Note: Round "Allocation rate" to 2 decimal places.
Home
1
2
3
Total
Expected Costs
Direct labor
Direct materials
Fringe benefits
Indirect materials
Total cost
Home 1
$ 61,000
107,000
The cost components to determine the total cost of each house:
Home 1
Home 2
Allocation Rate x Weight of Base = Allocated Cost
X
$
0
0
0
$
Home 2
$ 101,000
148,000
X
X
Allocation Rate x Weight of Base
0
X
$
0
=
=
=
Home 3
$ 174,000
197,000
=
=
$
= Allocated Cost
$
0
0
$
$
0…
Mary Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed below:
Maintenance
200,000.00
Material handling
32,000.00
Setups
100,000.00
Inspection
120,000.00
Currently, overhead is applied using a predetermined overhead rate, based on 80% of direct labor.
The company has been asked to submit a bid for a proposed job. The plant manager feels that getting this job would result in new business in future years. Bids are based on full manufacturing cost plus 20 percent.
Estimates for the proposed job are as follows:
Direct materials
6,000.00
Direct labor (1k hours)
10,000.00
No. of materials moves
12.00
No. of inspections
10.00
No. of setups
2.00
No. of machine hours
500.00
In the past, full manufacturing cost has been calculated using normal costing. The plant manager has heard of a new way of applying overhead that…
Chapter 19 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Ch. 19 - The Santos Shirt Company manufactures shirts in...Ch. 19 - Prob. 2TICh. 19 - Prob. 3TICh. 19 - Prob. 4TICh. 19 - Prob. 5TICh. 19 - Prob. 6TICh. 19 - Prob. 7TICh. 19 - Prob. 8TICh. 19 - Prob. 9TICh. 19 - Prob. 10TI
Ch. 19 - Prob. 11TICh. 19 - Prob. 12TICh. 19 - Which statement is false? a. Using a single...Ch. 19 - Compute It uses activity-based costing. Two of...Ch. 19 - Compute It uses activity-based costing. Two of...Ch. 19 - Compute It uses activity-based costing. Two of...Ch. 19 - Compute It can use ABC information for what...Ch. 19 - Prob. 6QCCh. 19 - Companies enjoy many benefits from using JIT....Ch. 19 - Which account is not used in JIT costing? a....Ch. 19 - The cost of lost future sales after a customer...Ch. 19 - Spending on testing a product before shipment to...Ch. 19 - What is the formula to compute the predetermined...Ch. 19 - How is the predetermined overhead allocation rate...Ch. 19 - Describe how a single plantwide overhead...Ch. 19 - Why is using a single plantwide overhead...Ch. 19 - Why is the use of departmental overhead allocation...Ch. 19 - What is activity-based management? How is it...Ch. 19 - How many cost pools are in an activity-based...Ch. 19 - What are the four steps to developing an...Ch. 19 - Why is ABC usually considered more accurate than...Ch. 19 - List two ways managers can use ABM to make...Ch. 19 - Define value engineering. How is it used to...Ch. 19 - Explain the difference between target price and...Ch. 19 - How can ABM be used by service companies?Ch. 19 - What is a just-in-time management system?Ch. 19 - Explain how the work cell manufacturing layout...Ch. 19 - What are the inventory accounts used in JIT...Ch. 19 - How is the Conversion Costs account used in JIT...Ch. 19 - Prob. 18RQCh. 19 - Which accounts are adjusted for the underallocated...Ch. 19 - Prob. 20RQCh. 19 - Prob. 21RQCh. 19 - Prevention is much cheaper than external failure....Ch. 19 - What are quality improvement programs?Ch. 19 - Prob. 24RQCh. 19 - Prob. 1SECh. 19 - The Oakman (Company (see Short Exercise S19-1) has...Ch. 19 - Activity-based costing requires four steps. List...Ch. 19 - Prob. 4SECh. 19 - Darby Corp. is considering the use of...Ch. 19 - The following information is provided for Orbit...Ch. 19 - Jaunkas Corp. manufactures mid-fi and hi-fi stereo...Ch. 19 - Spectrum Corp. makes two products: C and D. The...Ch. 19 - Refer to Short Exercise S19-8. Spectrum Corp....Ch. 19 - Haworth Company is a management consulting firm....Ch. 19 - Refer to Short Exercise S19-10. Haworth desires a...Ch. 19 - Prob. 12SECh. 19 - Prime Products uses a JIT management system to...Ch. 19 - Stegall, Inc. manufactures motor scooters. For...Ch. 19 - Koehler makes handheld calculators in two models:...Ch. 19 - Koehler (see Exercise E19-15) makes handheld...Ch. 19 - Koehler (see Exercise E19-15 and Exercise E19-16)...Ch. 19 - Franklin, Inc. uses activity-based costing to...Ch. 19 - Turbo Champs Corp. uses activity-based costing to...Ch. 19 - Eason Company manufactures wheel rims. The...Ch. 19 - Refer to Exercise E19-20. For 2019, Easons...Ch. 19 - Refer to Exercises E19-20 and E19-21. Controller...Ch. 19 - Treat Dog Collars uses activity-based costing....Ch. 19 - Western, Inc. is a technology consulting firm...Ch. 19 - Refer to Exercise E19-24. The president of Western...Ch. 19 - Prob. 26ECh. 19 - Refer to Exercise E19-26. Western desires a 20%...Ch. 19 - Lally, Inc. produces universal remote controls....Ch. 19 - Prob. 29ECh. 19 - Darrel Co. makes electronic components. Chris...Ch. 19 - Prob. 31ECh. 19 - Prob. 32ECh. 19 - Willitte Pharmaceuticals manufactures an...Ch. 19 - The Alright Manufacturing Company in Rochester,...Ch. 19 - Oscar, Inc. manufactures bookcases and uses an...Ch. 19 - Blanchette Plant Service completed a special...Ch. 19 - Low Range produces fleece jackets. The company...Ch. 19 - Stella, Inc. is using a costs-of-quality approach...Ch. 19 - Harcourt Pharmaceuticals manufactures an...Ch. 19 - The Alexander Manufacturing Company in Rochester,...Ch. 19 - Martin, Inc. manufactures bookcases and uses an...Ch. 19 - Rennie Plant Service completed a special...Ch. 19 - High Mountain produces fleece jackets. The company...Ch. 19 - Roxi, Inc. is using a costs-of-quality approach to...Ch. 19 - Download an Excel template for this problem online...Ch. 19 - This problem continues the Piedmont Computer...Ch. 19 - Prob. 1TIATCCh. 19 - Harris Systems specializes in servers for...Ch. 19 - Harris Systems has decided to adopt ABC. To remain...Ch. 19 - Prob. 1EICh. 19 - Anu Ghai was a new production analyst at RHI,...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Discussion Analysis A13-41 Discussion Questions 1. How do managers use the statement of cash flows? 2. Describ...
Managerial Accounting (4th Edition)
BE1-7 Indicate which statement you would examine to find each of the following items: income statement (IS), ba...
Financial Accounting: Tools for Business Decision Making, 8th Edition
1. For Frank’s Funky Sounds, straight-line depreciation on the trucks is a
Learning Objective 1
a. variable cos...
Horngren's Accounting (12th Edition)
How is activity-based costing useful for pricing decisions?
Cost Accounting (15th Edition)
E6-14 Using accounting vocabulary
Learning Objective 1, 2
Match the accounting terms with the corresponding d...
Horngren's Accounting (11th Edition)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month. York incurs $50 in indirect material cost. $150 in administrative labor, $300 in utilities, and $250 in depreciation expense. What is the predetermined overhead rate if direct labor hours are considered the cost driver? What is the cost of Job 0325? What is the overhead incurred during the month?arrow_forwardHicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)arrow_forwardCompute the total job cost for each of the following scenarios: a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials used totaled 5,000 and that the direct labor cost totaled 3,200. b. If the direct labor hour method is used in applying factory overhead and the predetermined rate is 10 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, and the number of direct labor hours totaled 250. c. If the machine hour method is used in applying factory overhead and the predetermined rate is 12.50 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, the direct labor hours were 250 hours, and the machine hours were 295 hours.arrow_forward
- Eli Lilly Corporation has their headquarters in Indiana. Lilly uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Lilly has provided the following estimated costs for next year: Direct Materials Direct Labor Rent on Factory Building Sales Salaries Depreciation on Factory Equipment Indirect Labor Production Supervisor's Salary Lilly estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be: Multiple Choice O O $4.18 $2.88 $1.95 $7,000 $21,000 $16,000 $26,000 $9,500 $13,500 $18,500 $2.40arrow_forwardWhite Consulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. The firm uses a job cost system with a predetermined indirect cost allocation rate computed as a percentage of expected direct labor costs. At the beginning of the year, managing partner Kenna White prepared the following plan, or budget, for the year: Direct labor hours (professionals). . . . 16,000 hours Direct labor costs (professionals). . . . $2,350,000 Office rent. . . . . . . . . . . . . . . . . . . . . . $220,000 Support staff salaries. . . . . . . . . . . . . $940,000 Utilities. . . . . . . . . . . . . . . . . . . . . . . . $350,000 Tibbs Resources is inviting several consulting firms to bid for work. White estimates that this job will require about 200 direct labor hours. Requirements: 1. Compute WhiteConsulting's (a) hourly direct labor cost rate and (b) indirect cost allocation rate. 2. Compute the…arrow_forwardRundle Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials adn labor costs are as follows. Expected Cost Home 1 Home 2 Home 3 Direct Labor $77,000 $100,000 $172,000 Direct Materials 108,000 146,000 198,000 Assume Randle needs to allocate two major overhead costs ($69,800 of employee fringe benefits and $36160 of indirect materials costs) among the three jobs. Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. "Round allocated rate to two decimal places.arrow_forward
- Omicronie Inc., provides project management services in the construction industry for a variety of clients. Each job is uniquely different and the Lynn Deberghie, the company’s accountant decided to use job costing for the allocation of costs on the current jobs. She will be using construction-labour hours as the basis for overhead allocation. In December 2021, she estimated the following amounts for 2022: Direct Materials $15,650,000 Construction Labour $11,200,000 Overhead $9,800,000 Construction Labour-Hours 600,000 The following results for the first quarter of 2022 for the following jobs that were started and completed in that same period. Library Dental Office Medical Building Direct Materials $924,000 $1,134,600 $1,525,000 Construction Labour-Hours 76,400 47,200 19,500 Rounding all answers to 2 decimal places Calculate the predetermined overhead allocation rate for 2022 and apply overhead to the three (3)…arrow_forwardMilan Manufacturing Company has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Supervision of direct labor Machine maintenance Facility rent Total overhead costs Cost driver Activity level 920,000 Overhead Costs $794,000 Direct labor-hours $140,000 Machine-hours 1,040,000 $216,000 $1,150,000 Square feet of area 130,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 230 Machine-hours 1,547 Square feet of area 50 OA. $0.86 per direct labor-hour OB. $0.80 per direct labor-hour OC. $1.16 per direct labor-hour OD. $1.25 per direct labor - hourarrow_forwardNile Corp. has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Supervision of direct labor Overhead Costs Cost drive Activity level $400,000 Direct labor - hours 800,000 Machine maintenance $108,000 Machine - hours 900,000 Facility rent $228,000 Square feet of area 120,000 Total overhead costs $736,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor - hours 260 Machine - hours 2,000 Square feet of area 60 Using the three cost pools to allocate overhead costs, what is the total amount of overhead costs to be allocated to the Mossman Job? O A. $478.00 O B. $462.80 OC. $17,218.25 O D. $484.00arrow_forward
- Beamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for next year: Direct materials Direct labor Sales commissions Salary of production supervisor Indirect materials Advertising expense Rent on factory equipment $ 1,000 $ 3,000 $ 4,000 $ 2,000 S 400 $ 800 $ 1,000 Beamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be: Predetermined overhead rate = Estimated total manufacturing overhead = Estimated total amount of the allocation base = $3,400 1,000 machine- hours = $3.40 per machine-hour $6.80 per machine-hour $6.00 per machine-hour $3.00 per machine-hour O $3.40 per machine-hourarrow_forwardThornton Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Home 1 Home 2 Home 3 Direct labor $ 66,000 $ 100,000 $ 178,000 Direct materials 109,000 139,000 181,000 Assume Thornton needs to allocate two major overhead costs ($51,600 of employee fringe benefits and $30,030 of indirect materials costs) among the three jobs.RequiredChoose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. (Round "Allocation rate" to 2 decimal places.)arrow_forwardXYZ Corporation uses ABC costing to allocate the overhead costs and these are the rates for each activity. $15 per batch for Setup: $50 per hour for Engineering and $10 per direct labor hour for Maintenance. Expected batches are 300, machine hours are 250, engineering hours are 1,000, and direct labor hours are 1,200. Given the information above, what is the total overhead cost that is allocated for Job 1? O $114,500 O $126,500 O $139,000 O $100,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY