ACCT208 Lecture Notes - Lecture 2: Deutsche Luft Hansa, Cost Driver, Total Absorption Costing
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Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments--Molding and Fabrication. It started, completed, and sold only two jobs during MarchâJob P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):
| Molding | Fabrication | Total | |||||||
| Estimated total machine-hours used | 2,500 | 1,500 | 4,000 | ||||||
| Estimated total fixed manufacturing overhead | $ | 15,000 | $ | 18,000 | $ | 33,000 | |||
| Estimated variable manufacturing overhead per machine-hour | $ | 3.40 | $ | 4.20 | |||||
| Job P | Job Q | |||||
| Direct materials | $ | 33,000 | $ | 18,000 | ||
| Direct labor cost | $ | 37,000 | $ | 15,500 | ||
| Actual machine-hours used: | ||||||
| Molding | 3,700 | 2,800 | ||||
| Fabrication | 2,600 | 2,900 | ||||
| Total | 6,300 | 5,700 | ||||
| Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month. Required: For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. 1. What was the companyâs plantwide predetermined overhead rate? (Round your answer to 2 decimal places.) 2. How much manufacturing overhead was applied to Job P and how much was applied to Job Q? (Do not round intermediate calculations.) 3. What was the total manufacturing cost assigned to Job P? (Do not round intermediate calculations.) 4. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 5. What was the total manufacturing cost assigned to Job Q? (Do not round intermediate calculations.) 6. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 7. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.) 8. What was Sweeten Companyâs cost of goods sold for March? (Do not round intermediate calculations.) 9. What were the companyâs predetermined overhead rates in the Molding Department and the Fabrication Department? (Round your answers to 2 decimal places.) 10. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.) 11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.) 12. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations.) 13. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) 15. What was Sweeten Companyâs cost of goods sold for March? (Do not round intermediate calculations.) | ||||||
Case 3-49
Avid Assemblers uses normal job-order costing to assign costs toproducts. The company assembles and packages 25 different productsaccording to customer specifications. Products are worked on inbatches of 20 to 40 units. Each batch is given a job number. OnOctober 1, the company had the following balances:
| Raw materials | $9,800 | |
| Work in process | 65,847 | |
| Finished goods | 30,640 |
Work in process consisted of the following jobs:
| Job 22 | Job 24 | Job 25 | |||||
| Direct materials | $6,200 | $5,190 | $4,800 | ||||
| Direct labour | 10,500 | 9,210 | 9,500 | ||||
| Applied overhead | 7,350 | 6,447 | 6,650 | ||||
| Total | $24,050 | $20,847 | $20,950 | ||||
| Number of units | 20 | 40 | 30 |
Finished goods consisted of Job 23, with the following costs:
| Job 23 | ||
| Direct materials | $8,200 | |
| Direct labour | 13,200 | |
| Applied overhead | 9,240 | |
| Total | $30,640 | |
| Number of units | 50 |
Shown below are the direct cost data related to jobs started inOctober:
| Job 26 | Job 27 | Job 28 | Total | ||||||
| Direct materials | $5,180 | $5,600 | $4,200 | $14,980 | |||||
| Direct labour | 11,200 | 9,340 | 5,910 | 26,450 | |||||
| Number of units | 20 | 30 | 20 |
Other information:
| 1. | Direct materials and direct labour added tobeginning work in process in October were as follows:
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| 2. | Overhead is applied at a predetermined rate basedon the direct labour cost. | |||||||||||||||||||||||||||||||||||
| 3. | Actual expenses for October were as follows:
* 80% of employer contributions and benefits relate to factorypersonnel. | |||||||||||||||||||||||||||||||||||
| 4. | Purchases of direct materials (raw materials)during October amounted to $28,500. Indirect materials (supplies)are handled in a separate account. | |||||||||||||||||||||||||||||||||||
| 5. | Only Job Nos. 27 and 28 are still in process atclosing on October 31. Finished goods consisted only of Job No. 25at month end. | |||||||||||||||||||||||||||||||||||
6. | Avid writes off any under- and over-applied overhead to Cost ofGoods Sold in the month in which it is incurred. Requirements: | |||||||||||||||||||||||||||||||||||
a.Calculate Predetermined overhead rate
b.Calculate Unit cost of job 24 in October
c.Calulate the Oct 31 Balances for the following account:
Raw Materials, Work in Process, Finished Goods
d.What is the cost of goods manufactured?
e. Determine the under- or over- paid in October
Prepare the journal entry to dispose of this amount.
1. The Zoe Corporation has the following information for themonth March. Determine the (a) cost of goods manufactured, and (b)cost of goods sold.
Cost of materials placed in production | $69,000 |
Direct labor | 27,000 |
Factory overhead | 34,000 |
Work in process, March 1 | 15,000 |
Work in process, March 31 | 19,500 |
Finished goods inventory, March 1 | 25,000 |
Finished goods inventory, March 31 | 23,000 |
2. Magnus Industries hasthe following data:
Beginning Raw Materials Inventory | $75,000 |
Materials purchased | $40,000 |
Ending Raw Materials Inventory | $60,000 |
Show how you would calculate Raw Materials Used.
3. Cavy Company estimatesthat total factory overhead costs will be $660,000 for the year.Direct labor hours are estimated to be 100,000. Determine (a) thepredetermined factory overhead rate, (b) the amount of factoryoverhead applied to Job 345 if the amount of direct labor hours is560 and Job 777 if the amount of direct labor hours is 800, and (c)prepare the journal entry to apply factory overhead in Aprilaccording to the predetermined overhead rate.
4 At the end ofApril, Cavy Company had completed Job 766 and 765. According to theindividual job cost sheets the information is as follows:
Job | Direct Materials | Direct Labor | Machine Hours |
Job 765 | $5,670 | $3,500 | 27 |
Job 766 | $8,900 | $4,775 | 44 |
Job 765 produced 152 units, and Job 766 consisted of 250units.
Assuming that the predetermined overhead rate is applied byusing machine hours at a rate of $200 per hour, determine the (a)balance on the job cost sheets for each job, and (b) the cost perunit at the end of April.
5. The Winston Companyestimates that the factory overhead for the following year will be$1,250,000. The company has decided that the basis for applyingfactory overhead should be machine hours, which is estimated to be50,000 hours. The total machine hours for the year was 54,300. Theactual factory overhead for the year was $1,375,000.
a) Determine the total factory overhead amount applied.
b) Calculate the over or under applied amount for the year.
c) Prepare the journal entry to close factory overhead into Costof Goods Sold.
6. The manufacturing costof Carrie Industries for the first three months of the year areprovided below:
Total Cost | Production | |
January | $ 93,300 | 2,300 Units |
February | 115,500 | 3,100 |
March | 79,500 | 1,900 |
Using the high-low method, determine the (a) variable cost perunit, and (b) the total fixed cost.
7. Bobby Company has fixedcosts of $160,000. The unit selling price, variable cost per unit,and contribution margin per unit for the company
