15th Edition

ISBN: 9781259405303

Author: Garrison

Publisher: MCG

Concept explainers

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing …

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In compari…

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Textbook Question

Chapter 3, Problem 29C

CASE 2-22 Plantwide versus Departmental Overhead Rates; Pricing LO2-1, LO2-2, LO2-3, LO2-4

Chapter 3, Problem 29C, CASE 2-22 Plantwide versus Departmental Overhead Rates; Pricing LO2-1, LO2-2, LO2-3, LO2-4 'Blast

'Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $2000. It seems we’re either too half to pet the job or too low to make any money on half the jobs we bid.”
Teledex Company manufactures products to customers' specifications and uses a job-order costing system The company uses a plantwide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all feed) to jobs, The following estimates were made at the beginning of the year.

Department
FabricatingMachiningAssemblyTotal Plant

Manufacturing overhead....$350,000$400,000$90,000$840,000

Direct labor.......$200,000$100,000$300,000$600,000

Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows:

Department

	Fabricating	Machining	Assembly	Total Plant
Direct materials	$3,000	$200	$1,400	$4,600
Direct labor	$2,800	$500	$6,200	$9,500
Manufacturing overhead ...	?	?	?	?

Required:

Using the company's plantwide approach:
a. Compute the predetermined overhead rate for each department for the current year.

b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Under theseconditions:

Explain the difference between the manufacturing overhead that would have been applied to the Koopers job using the plantwide approach in question 1 (b) and using the

Assume that it is customary in the industryto bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What was the company's bid price on the Koopers job using a plantwide predetermined overhead rate? What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost?

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Chapter 3, Problem 28P

Chapter 3, Problem 30C

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Plantwide Overhead Rate versus Departmental Rates, Effects on Pricing Decisions Cherise Ortega, marketing manager for Romer Company, was puzzled by the outcome of two recent bids. The company's policy was to bid 150 percent of the full manufacturing cost. One job (labeled Job 97-28) had been turned down by a prospective customer, who had indicated that the proposed price was $3 per unit higher than the winning bid. A second job (Job 97-35) had been accepted by a customer, who was amazed that Romer could offer such favorable terms. This customer revealed that Romer's price was $43 per unit lower than the next lowest bid. Cherise has been informed that the company was more than competitive in terms of cost control. Accordingly, she began to suspect that the problem was related to cost assignment procedures. Upon investigating, Cherise was told that the company uses a plantwide overhead rate based on direct labor hours. The rate is computed at the beginning of the year using budgeted…

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Chapter 3 Solutions

MANAGERIAL ACCT W/CONNECT >IC<

Ch. 3.A - Prob. 1E Ch. 3.A - Prob. 2E Ch. 3.A - Prob. 3E Ch. 3.A - PROBLEM 3A-4 Activity-Based Absorption Costing as...Ch. 3.A - Prob. 5P Ch. 3.A - CASE 3A-6 Activity-Based Absorption Costing and...Ch. 3.B - Prob. 1E Ch. 3.B - Prob. 2E Ch. 3.B - Prob. 3P Ch. 3.B - Prob. 4C

Ch. 3 - Prob. 1Q Ch. 3 - Prob. 2Q Ch. 3 - Prob. 3Q Ch. 3 - Prob. 4Q Ch. 3 - Prob. 5Q Ch. 3 - Prob. 6Q Ch. 3 - Prob. 7Q Ch. 3 - Prob. 8Q Ch. 3 - 3-9 What is underapplied overhead? Overapplied...Ch. 3 - Prob. 10Q Ch. 3 - Prob. 11Q Ch. 3 - Prob. 12Q Ch. 3 - Prob. 13Q Ch. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - Prob. 3AE Ch. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - Prob. 1F15 Ch. 3 - Prob. 2F15 Ch. 3 - Prob. 3F15 Ch. 3 - Prob. 4F15 Ch. 3 - Prob. 5F15 Ch. 3 - Prob. 6F15 Ch. 3 - Prob. 7F15 Ch. 3 - Prob. 8F15 Ch. 3 - Prob. 9F15 Ch. 3 - Prob. 10F15 Ch. 3 - Prob. 11F15 Ch. 3 - Prob. 12F15 Ch. 3 - Prob. 13F15 Ch. 3 - Prob. 14F15 Ch. 3 - Prob. 15F15 Ch. 3 - Prob. 1E Ch. 3 - Prob. 2E Ch. 3 - Prob. 3E Ch. 3 - EXERCISE 24 Computing Total Job Costs and Unit...Ch. 3 - EXERCISE 2-5 Computing Total Job Costs and Unit...Ch. 3 - Prob. 6E Ch. 3 - EXERCISE 2-7 Job-Order Costing; Working Backwards...Ch. 3 - Prob. 8E Ch. 3 - EXERCISE 3-9 Journal Entries and T-accounts...Ch. 3 - Prob. 10E Ch. 3 - Prob. 11E Ch. 3 - Prob. 12E Ch. 3 - Prob. 13E Ch. 3 - Prob. 14E Ch. 3 - Prob. 15E Ch. 3 - Prob. 16E Ch. 3 - Prob. 17E Ch. 3 - Prob. 18E Ch. 3 - Prob. 19E Ch. 3 - EXERCISE 2—13 Departmental Predetermined Overhead...Ch. 3 - EXERCISE 214 Job-Orders Costing for a Service...Ch. 3 - Prob. 22P Ch. 3 - PROBLEM 2—16 Plantwide Predetermined Overhead...Ch. 3 - Prob. 24P Ch. 3 - Prob. 25P Ch. 3 - Prob. 26P Ch. 3 - Prob. 27P Ch. 3 - PROBLEM 2-21 Plant wide Versus Multiple...Ch. 3 - CASE 2-22 Plantwide versus Departmental Overhead...Ch. 3 - Prob. 30C

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