17E MANAGERIAL ACCOUNTING CUSTOM
17th Edition
ISBN: 9781266776328
Author: Garrison
Publisher: MCG
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Chapter 2, Problem 13E
EXERCISE 2—13 Departmental Predetermined
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates:
| Department | ||
| Cutting | Finishing | |
| Direct labor-hours | 6,000 | 30,000 |
| Machine-hours | 48,000 | 5,000 |
| Total fixed manufacturing overhead cost | $264,000 | $366,000 |
| Variable manufacturing overhead per machine-hour | $2.00 | - |
| Variable manufacturing overhead per direct labor-hour | - | $4.00 |
Required:
- Compute the predetermined overhead rate for each department.
- The
job cost sheet for Job 203, which was started and completed during the year, showed the following:
| Department | ||
| Cutting | Finishing | |
| Direct labor-hours | 6 | 20 |
| Machine-hours | 80 | 4 |
| Direct materials | $500 | $310 |
| Direct labor cost | $108 | $360 |
page 91
Using the predetermined overhead rates that you computed in (1) above, compute the total
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1
Mc
Graw
Exercise 2-13 (Static) Departmental Predetermined Overhead Rates [LO2-1, LO2-2, LO2-4]
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a
predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing
Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates:
Department
Direct labor-hours
Machine-houre
Total fixed manufacturing overhead coat
Variable manufacturing overhead per machine-hour
Variable manufacturing overhead per direct labor-hour
Direct labor-hours
Machine-hours
Direct materials
Direct labor cost
Required:
1. Compute the predetermined overhead rate for each department.
2. The job cost sheet for Job 203, which was started and completed during the year, showed the following:
Department
Cutting
Required 1
6
NO
$ 500
$ 108
Cutting
6,000
48,000
$ 264,000
$ 2.00
Finishing
20
4
$310…
8
Chapter 33
1.
EXERCISE 3-15 Plantwide and Departmental Predetermined Overhead Rates; Job Costs L03-1,
LO3-2, LO3-3, L03-4
Delph Company uses a job-order costing system and has two manufacturing departments-Molding
and Fabrication. The company provided the following estimates at the beginning of the year:
Machine-hours.....
Fixed manufacturing overhead cost....
Variable manufacturing overhead cost per machine-hour
3.
Job D-70
Direct materials cost.
Direct labor cost
Machine-hours..
Job C-200
Direct materials cost.
Direct labor cost
Machine-hours..
During the year, the company had no beginning or ending inventories and it started, com-
pleted, and sold only two jobs-Job D-70 and Job C-200. It provided the following information
related to those two jobs:
a.
b.
in C.
Molding
oshib
20,000
$700,000
$3.00
Total
Delph had no underapplied or overapplied manufacturing overhead during the year.
Required:
Assume Delph uses a plantwide predetermined overhead rate based on machine-hours.
Compute…
PROBLEM 3-17 Plantwide and Departmental Predetermined Overhead Rates; Overhead Application
LO3-1, L03-2
Wilmington Company has two manufacturing departments-Assembly and Fabrication. It con-
siders all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown
below is based on estimates from the beginning of the year. The second set of data relates to one
particular job completed during the year-Job Bravo.
3T DANA
Estimated Data
Manufacturing overhead costs
Direct labor-hours.
Machine-hours.
Job Bravo
Direct labor-hours.
Machine-hours.
Assembly
Fabrication
$600,000
$800,000
50,000
30,000
20,000 100 100,000
artes
Assembly
11
3
Fabrication
3
6
Total
$1,400,000
480,000
120,000
Total
14
9
Required:
psild
1.
If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how
much manufacturing overhead would be applied to Job Bravo?
betiups
2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the…
Chapter 2 Solutions
17E MANAGERIAL ACCOUNTING CUSTOM
Ch. 2.A - EXERCISE 2A-1 Activity-Based Absorption Costing...Ch. 2.A - EXERCISE 2A-2 Activity-Based Absorption Costing as...Ch. 2.A - EXERCISE 2A-3 Activity-Based Absorption Costing as...Ch. 2.A - PROBLEM 2A-4 Activity-Based Absorption Costing as...Ch. 2.A - Prob. 5PCh. 2.A -
CASE 2A-6 Activity-Based Absorption Costing and...Ch. 2.B - EXERCISE 2B-1 Overhead Rate Based on Capacity...Ch. 2.B - EXERCISE 2B-2 Overhead Rates and Capacity Issues...Ch. 2.B - Prob. 3PCh. 2.B - Prob. 4C
Ch. 2 - Prob. 1QCh. 2 - What is absorption costing?Ch. 2 - What is normal costing?Ch. 2 - How is the unit product cost of a job calculated?
Ch. 2 - Explain the four-step process used to compute a...Ch. 2 - What is the purpose of the job cost sheet in a...Ch. 2 - Explain why some production costs must be assigned...Ch. 2 - Why do companies use predetermined overhead rates...Ch. 2 - What factors should be considered in selecting an...Ch. 2 - If a company fully allocates all of its overhead...Ch. 2 - Would you expect the amount of applied overhead...Ch. 2 - Prob. 12QCh. 2 - What is a plantwide overhead rate? Whyare multiple...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Prob. 3AECh. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Prob. 1F15Ch. 2 - Prob. 2F15Ch. 2 - Prob. 3F15Ch. 2 - Prob. 4F15Ch. 2 - Prob. 5F15Ch. 2 - Prob. 6F15Ch. 2 - Prob. 7F15Ch. 2 - Prob. 8F15Ch. 2 - Prob. 9F15Ch. 2 - Prob. 10F15Ch. 2 - Prob. 11F15Ch. 2 - Sweeten Company had no jobs in progress at the...Ch. 2 - Prob. 13F15Ch. 2 - Prob. 14F15Ch. 2 - Prob. 15F15Ch. 2 - EXERCISE 2-1 Compute a Predetermined Overhead Rate...Ch. 2 - Prob. 2ECh. 2 - EXERCISE 2–3 Computing Total Job Costs and Unit...Ch. 2 - EXERCISE 24 Computing Total Job Costs and Unit...Ch. 2 - EXERCISE 2-5 Computing Total Job Costs and Unit...Ch. 2 - Prob. 6ECh. 2 - EXERCISE 2-7 Job-Order Costing; Working Backwards...Ch. 2 - EXERCISE 2-8 Applying Overhead Cost; Computing...Ch. 2 - EXERCISE 2–9 Job-Order Costing and Decision Making...Ch. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - EXERCISE 2—13 Departmental Predetermined Overhead...Ch. 2 - EXERCISE 214 Job-Orders Costing for a Service...Ch. 2 - Prob. 15ECh. 2 - PROBLEM 2—16 Plantwide Predetermined Overhead...Ch. 2 - PROBLEM 217 Plantwide and Departmental...Ch. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - PROBLEM 2-21 Plant wide Versus Multiple...Ch. 2 - CASE 2-22 Plantwide versus Departmental Overhead...
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- Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.arrow_forward9arrow_forwardOBJEC Exercise 4.14 Departmental Overhead Rates Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Harry Whipple, the plant manager, has heard that departmental overhead rates. can offer significantly better cost assignments than can a plantwide rate. Mariposa has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) Normal activity (machine hours) $720,000 120,000 $180,000 60,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. 2. Compute predetermined overhead rates for each department using machine hours.arrow_forward
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- Exercise 4-5 Assigning Overhead to Products in ABC [LO4-2, LO4-3] Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Cost Pool Activity Measure ExpectedOverhead Cost Expected Activity Labor-related Direct labor-hours $ 156,000 26,000 DLHs Purchase orders Number of orders $ 11,000 220 orders Parts management Number of part types $ 80,000 100 part types Board etching Number of boards $ 90,000 2,000 boards General factory Machine-hours $ 180,000 20,000 MHs Required: 1. Compute the activity rate for each of the activity cost pools. 2. The expected activity for the year was distributed among the company’s four products as follows: Expected Activity Activity Cost Pool Product A Product B Product C Product D Labor-related (DLHs) 6,000 11,000 4,000 5,000 Purchase orders (orders) 60…arrow_forwardJob Order Costing – Problem 2 Job order costing system is used by Amber Inc. Machine hours is used as the based for plantwide overhead rate. However, the manager has heard that overhead rate by department can improve cost assignment than plantwide rate. Below is the information for the two departments: Department A Department B Overhead costs (expected) $75,000 $33,000 Normal activity (machine hours) 10,000 8,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. 2. Compute predetermined overhead rates for each department using machine hours. (Note: Carry your calculations out to three decimal places.) 3. Job 73 used 20 machine hours from Department A and 50 machine hours from Department B. Job 74 used 50 machine hours from Department A and 20 machine hours from Department B. Compute the overhead cost assigned to each job using the plantwide rate computed in Requirement 1. Repeat the computation using the departmental rates found in…arrow_forwardČ P112,500 D P177,400 2DThe cost of goods put to process for the month of June is: A P717600 B P803,600 C P957,000 D P957,600arrow_forward
- 2.arrow_forwardquestion 8arrow_forwardOverhead Applied to Jobs, Departmental Overhead Rates Xania Inc. uses a normal job-order costing system. Currently, a plantwide overhead rate based on machine hours is used. Xania's plant manager has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Xania has the following data for its two departments for the coming year: Department A Department B $120,000 $69,000 13,500 Overhead costs (expected) Normal activity (machine hours) Required: 1. Compute a predetermined overhead rate for the plant a whole based on machine hours. Round your answer to two decimal places. 6.92 ✓ per machine hour 2. Compute predetermined overhead rates for each department using machine hours. (Note: Round to two decimal places, if necessary.) Department A 8.89 per machine hour 5 per machine hour 3. Conceptual Connection: Job 73 used 20 machine hours from Department A and 50 machine hours from Department B. Job 74 used 50 machine hours from…arrow_forward
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