ADMS 2510 Lecture 2: ME1 2014F

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pinkcattle778

2 Nov 2015

School

York University

Department

Administrative Studies

Course

ADMS 2510

Professor

John Paschakis

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ADMS 2510 Full Course Notes

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Time: 3 hours fall 2014 questions: 40 (available in database 53) The bus company uses a job-order costing system. Job number beginning inventory direct materials direct labour. The direct labour wage rate is per hour. Overhead is applied at the rate of per direct labour hour. Jobs 1, 2, and 3 have been completed and transferred to finished goods. Job 1 has been delivered to the customer: what is the ending work in process inventory, ,575, ,350, ,325, ,150, none of the above. Ans: e direct labour hours = / per hour = 40 hours. Job 4 = ei = 750 + 4,000 + 40 hrs @ /hr = ,430: what is the cost of goods manufactured for september, ,925, ,055, ,625, ,755, none of the above. Ans: b cgm = total cost of jobs 1, 2 and 3 bi + dm + dl + oh applied.

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Scholastic Brass Corporation manufactures brass musicalinstruments for use by high school students. The company uses anormal costing system, in which manufacturing overhead is appliedon the basis of direct-labor hours. The companyâs budget for thecurrent year included the following predictions.

Budgeted total manufacturing overhead..........................................................................................................$426,300

Budgeted total direct-labor hours (based on practical capacity).....................................................................20,300

During March, the firm worked on the following two productionjobs: Job number T81, consisting of 76 trombones Job number C40,consisting of 110 cornetsThe events of March are described asfollows:

a. One thousand square feet of rolled brass sheet metal werepurchased on account for $5,000.

b. Four hundred pounds of brass tubing were purchased on accountfor $4,000.

c. The following requisitions were submitted on March 5: Directlabor: Job number T81, 800 hours at $20 per hour Direct labor: Jobnumber C40, 900 hours at $20 per hour Indirect labor: Generalfactory cleanup, $4,000 Indirect labor: Factory supervisorysalaries, $9,000 Requisition number 112: 250 square feet of brasssheet metal at $5 per square foot (for job number T81) Requisitionnumber 113: 1,000 pounds of brass tubing, at $10 per pound (for jobnumber C40) Requisition number 114: 10 gallons of valve lubricant,at $10 per gallonAll brass used in production is treated as directmaterial. Valve lubricant is an indirect material.

d. An analysis of labor time cards revealed the following laborusage for March.

Direct labor: Job number T81, 800 hours at $20 per hour

Direct labor: Job number C40, 900 hours at $20 per hour Indirectlabor:

General factory cleanup, $4,000 Indirect labor:

Factory supervisory salaries, $9,000

e. Depreciation of the factory building and equipment duringMarch amounted to $12,000.

f. Rent paid in cash for warehouse space used during March was$1,200.

g. Utility costs incurred during March amounted to $2,100. Theinvoices for these costs were received, but the bills were not paidin March.

h. March property taxes on the factory were paid in cash,$2,400.

i. The insurance cost covering factory operations for the monthof March was $3,100. The insurance policy had been prepaid.

j. The costs of salaries and fringe benefits for sales andadministrative personnel paid in cash during March amounted to$8,000.

k. Depreciation on administrative office equipment and spaceamounted to $4,000.

l. Other selling and administrative expenses paid in cash duringMarch amounted to $1,000.

m. Job number T81 was completed on March 20.

n. Half of the trombones in job number T81 were sold on accountduring March for $700 each.

The March 1 balances in selected accounts are as follows:

Cash...................................................................................................................................................................$??10,000

Accounts Receivable.........................................................................................................................................21,000

Prepaid Insurance.............................................................................................................................................5,000

Raw-Material Inventory.....................................................................................................................................149,000

Manufacturing Supplies Inventory....................................................................................................................500

Work-in-Process Inventory................................................................................................................................91,000

Finished-Goods Inventory.................................................................................................................................220,000

Accumulated Depreciation: Buildings and Equipment.....................................................................................102,000

Accounts Payable..............................................................................................................................................13,000

Wages Payable..................................................................................................................................................8,000

Required:

1. Calculate the companyâs predetermined overhead rate for theyear.

2. Prepare journal entries to record the events of March.

3. Set up T-accounts, and post the journal entries made inrequirement (2).

4. Calculate the overapplied or underapplied overhead for March.Prepare a journal entry to close this balance into Cost of GoodsSold.

5. Prepare a schedule of cost of goods manufactured forMarch.

6. Prepare a schedule of cost of goods sold for March.

7. Prepare an income statement for March.

NEED ALL SEVEN QUESTIONS ANSWERED PLEASE.

ivorycoyote227

FiberCom, Inc., a manufacturer of fiber optic communicationsequipment, uses a job-order costing sys-tem. Since the productionprocess is heavily automated, manufacturing overhead is applied onthe basis of machine hours using a predetermined overhead rate. Thecurrent annual rate of $15 per machine hour is based on budgetedmanufacturing overhead costs of $1,200,000 and a budgeted activitylevel of 80,000 machine hours (the companyâs estimated practicalcapacity). Operations for the year have been completed, and all ofthe accounting entries have been made for the year except theapplication of manu-facturing overhead to the jobs worked on duringDecember, the transfer of costs from Work-in-Process toFinished-Goods for the jobs completed in December, and the transferof costs from Finished Goods to Cost of Goods Sold for the jobsthat have been sold during December. Summarized data as of November30 and for the month of December are presented in the followingtable. Jobs T11-007, N11-013, and N11-015 were completed duringDecember. All completed jobs except Job N11-013 had been turnedover to customers by the close of business on December 31

Work-in-Process December Activity

Job No. Balance November 30 Direct Material Direct Labor MachineHours

T11-007 .....................$ ??????87,000 $ ? 1,500..........................$ ? 4,500 .........................300

N11-013 .................... 55,000 ?? 4,000.......................... 12,000.........................1,000

N11-015 .................... -0- ?????? 25,600.......................... 26,700.........................1,400

D12-002 .................... -0- ?????? 37,900.......................... ?20,000.........................2,500

D12-003 .................... ??? -0- 26,000.......................... 16,800......................... ? 800

Total .......................$142,000 $95,000..........................$80,000.........................6,000

Operating Activity Activity through November 30 DecemberActivity

Actual manufacturing overhead incurred:

Indirect material .................................... $?125,000 .......................... $ 9,000

Indirect labor ......................................... ?345,000 .......................... 30,000

Utilities ................................................... ?245,000 .......................... 22,000

Depreciation .......................................... 385,000.......................... 35,000

Total overhead ...................................... $1,100,000.......................... $96,000

Other data:

Raw-material purchases* ...................... $ ?965,000.......................... $98,000

Direct-labor costs .................................. $ ?845,000......................... .$80,000

Machine hours ....................................... ?73,000......................... .6,000

.Account Balances at Beginning of Year January 1

Raw-material inventory* ............................$105,000

Work-in-process inventory ......................... ? 60,000

Finished-goods inventory .......................... 125,000

*Raw-material purchases and raw-material inventory consist ofboth direct and indirect materials. The balance of the Raw-MaterialInventory account as of December 31 of the year just completed is$85,000..

Required:

1. Explain why manufacturers use a predetermined overhead rateto apply manufacturing overhead to their jobs.

2. How much manufacturing overhead would FiberCom have appliedto jobs through November 30 of the year just completed?

3. How much manufacturing overhead would have been applied tojobs during December of the year just completed?

4. Determine the amount by which manufacturing overhead isoverapplied or underapplied as of December 31 of the year justcompleted.

5. Determine the balance in the Finished-Goods Inventory accounton December 31 of the year just completed.

6. Prepare a Schedule of Cost of Goods Manufactured forFiberCom, Inc. for the year just completed. (Hint: In computing thecost of direct material used, remember that FiberCom includes bothdirect and indirect material in its Raw-Material Inventoryaccount.)

NEED #6 FIGURED OUT PLEASE

blueturtle674

1. Tommy's Toys produces two types of toys: trains and dolls.Tommy's uses stainless steel to manufacture the trains and plasticto manufacture the dolls. Information regarding the usage of steeland plastic for the past year follows:

Product Names	Steel	Plastic
Direct materials information
Standard pounds per unit	2 lb.	1.0 lb.
Standard Price (SP) per pound	$3.00	?
Actual Quantity (AQ) used per unit	3.0 lb.	3.00 lb.
Actual Price (AP) paid for material	$1.75	$2.25
Actual Quantity Purchased (AQP) and used	2,800 lb.	800 lb.
Price variance	?	$1,200 F
Quantity variance	$900 U	?
Flexible budget variance	?	$412 F
Number of units produced	300	525

What is the direct materials flexible budget variance for steelused to manufacture the trains?

	A. $4,400 favorable
	B. $2,600 unfavorable
	C. $2,600 favorable
	D. $4,400 unfavorable

2. Sparky the Electrician specializes in rewiring historichouses. Sparky recently purchased a new wire-pulling device thatwill decrease the time needed to complete each job and increasetotal revenues. The device will cost $5,577 and will increase netcash flows by $1,690 per year. The new device has a useful life of7 years and a residual value of $0. What is the payback period forthe new wire-pulling device?

	A. 3.12 years
	B. 2.80 years
	C. 3.48 years
	D. 3.30 years

3. Sharon Corporation collects 10% in the second month followingsale, 40% in the month following sale, and 40% of a month's salesin the month of sale. The company has found that 10% of their salesare uncollectible. Budgeted sales for the upcoming four monthsare:

August budgeted sales	$280,000
September budgeted sales	$350,000
October budgeted sales	$380,000
November budgeted sales	$240,000

The amount of cash that will be collected in November isbudgeted to be

	A. $316,000
	B. $96,000
	C. $283,000
	D. $216,000

4. Suppose Whole Foods is considering investing inwarehouse-management software that costs $900,000; has $40,000residual value; and should lead to cash cost savings of $180,000per year for its 5-year life. In calculating the ARR, which of thefollowing figures should be used as the equation's denominator?

A.$220,000

B. $180,000

C. $40,000

D. $900,000

5. All of the following budgets are prepared by merchandisingcompanies except

	A.cost of goods sold, inventory andpurchases.
	B. operating expense.
	C. direct materials.
	D. sales.

6. The Stallard Corporation manufactures Product X that consumesa large amount of overhead. For the month of October, Stallardproduced 14,200 units of Product X and incurred actual overheadcosts of $269,000. The standard costs developed for Product X byStallard follow:

Standard direct labor hours per unit	4
Standard direct labor rate per hour	$11.00

Standard overhead hours per unit	8
Standard overhead rate per hour	$4.80

What was the total variable overhead variance for Product X inOctober?

	$276,280 favorable
	$200,840 favorable
	$276,280 unfavorable
	$200,840 unfavorable

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ADMS 2510 Lecture 2: ME1 2014F

ADMS 2510 Full Course Notes

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