BUS 202 Lecture 5: February 1st
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Department
BUS - Business Administration
Course
BUS 202
Professor
Nick Ross
Semester
Spring

Description
February 1st Wednesday, February 1, 20179:09 AM • Job costing (CONTINUED) ○ Logeson manufactures computer mic xam material) ----- Estimate Actuals § Machine hours 12,000 14,500 Total MOH $306,000 $350,000 § Use Machine hours (MH) as their allocation base § POH = $306,000/12,000 = $25.5/MH □ Why the predetermined overhead rate ® To determine the cost of product so the price will be the best suited Creates a tax to cover all that is not covered in manufacturing costs ® § Order: □ 1,200 mice ® Use 1 circuit board ($2) ® 1 3ft cable ($.80) ® 1 plastic enclosure ($.30) ® 1 roller ball ($.25) ® Each mouse takes 1/10 of a minute (6 sec) of machine time ® What is the cost of this job? ◊ MOH= ((1,200 * (1/10) * $25.50) /60) = $51.00 ◊ Direct material cost: } Circuit board: $2.00 * 1200 = $2400.00 } $.80 *1200 = $960.00 } $.30 * 1200 = $360.0 } $.25 * 1200 = $300.00 – Total = $4071 ◊ What is the average cost per mouse } ($4071) / 1200=$3.39 ® How much MOH was applied during the year? ◊ 14,500 *$25.50 = $369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied by $369,750.00 -$350,000 = $19,750.00 – Within 10% is ok ○ Pottery Works: February 1st Wednesday, February 1, 20179:09 AM • Job costing (CONTINUED) ○ Logeson manufactures computer mic xam material) ----- Estimate Actuals § Machine hours 12,000 14,500 Total MOH $306,000 $350,000 § Use Machine hours (MH) as their allocation base § POH = $306,000/12,000 = $25.5/MH □ Why the predetermined overhead rate ® To determine the cost of product so the price will be the best suited Creates a tax to cover all that is not covered in manufacturing costs ® § Order: □ 1,200 mice ® Use 1 circuit board ($2) ® 1 3ft cable ($.80) ® 1 plastic enclosure ($.30) ® 1 roller ball ($.25) ® Each mouse takes 1/10 of a minute (6 sec) of machine time ® What is the cost of this job? ◊ MOH= ((1,200 * (1/10) * $25.50) /60) = $51.00 ◊ Direct material cost: } Circuit board: $2.00 * 1200 = $2400.00 } $.80 *1200 = $960.00 } $.30 * 1200 = $360.0 } $.25 * 1200 = $300.00 – Total = $4071 ◊ What is the average cost per mouse } ($4071) / 1200=$3.39 ® How much MOH was applied during the year? ◊ 14,500 *$25.50 = $369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied by $369,750.00 -$350,000 = $19,750.00 – Within 10% is ok ○ Pottery Works: ◊ 14,500 *$25.50 = $369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied by $369,750.00 -$350,000 = $19,750.00 – Within 10% is ok ○ Pottery Works: Allocation BaseMACHINE DIRECT LABOR HOURS HOURS Estimates Molding Painting DLH 12,000 60,000 MH 70,000 8,000 § DM 510,000 650,000 DL Cost 130,000 420,000 FMOH 497,000 615,000 VMOH/MH 1.50 ---------- VMOH/DLH -------- 2.00 □ POH(molding): ® (497,000 + ($1.50 * 70,000)) / (70,000) = $8.60 /MH □ POH(painting): (615,000 + ($2.00 * 60,000)) / (60,000) = $12.25 /DLH ® JOB 205: Molding Painting DLH 30 84 □ MH 110 20 DM $470 $332 DL Cost $325 $588 ® Compute the total cost of JOB 205: ◊ DL: } $325 + $588 = 913 ◊ DM: } $470 + $332 = 802 ◊ MOH: } (110 * $8.60) + ($12.25 * 84) = $1,975.00 ◊ Total Cost: } $913 + $802 + $1,975.00 = $3,690.00 □ At the end of the year: End of Year Molding Painting Actuals DLH 10,000 62,000 ◊ 14,500 *$25.50 = $369,750.00 } We over applied the MOH because reality was larger than the actual in the table – Over applied b
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