23. A plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection P 100,000 P 300,000 The plant currently applied overhead using direct labor hours and expected actual capacity. This figure is 50,000 direct labor hours. The plant manager has been asked to submit a bid and has assembled the following data on the proposed budget for the potential job: Direct materials Direct labor Factory overhead Number of material movements Number of inspections P 3,700 P 7,000 10 5 ? The manager has been told that many competitors use an activity-based costing approach to assign overhead to jobs. Before submitting a bid, the manager wants to assess the effects of this alternative approach. The manager estimates that the expected number of material moves for all jobs during the year is 1,000; 5,000 quality inspections are expected to be performed. Assuming the bid price of full manufacturing cost plus 25 percent, what should be the bid under ABC approach? a. P 12,000 b. P 12,325 C. P 15,000 d. P 18,700

23. A plant has two categories of overhead: material handling and quality inspection. The costs expected for these categories for the coming year are as follows: Material handling Quality inspection P 100,000 P 300,000 The plant currently applied overhead using direct labor hours and expected actual capacity. This figure is 50,000 direct labor hours. The plant manager has been asked to submit a bid and has assembled the following data on the proposed budget for the potential job: Direct materials Direct labor Factory overhead Number of material movements Number of inspections P 3,700 P 7,000 10 5 ? The manager has been told that many competitors use an activity-based costing approach to assign overhead to jobs. Before submitting a bid, the manager wants to assess the effects of this alternative approach. The manager estimates that the expected number of material moves for all jobs during the year is 1,000; 5,000 quality inspections are expected to be performed. Assuming the bid price of full manufacturing cost plus 25 percent, what should be the bid under ABC approach? a. P 12,000 b. P 12,325 C. P 15,000 d. P 18,700

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 11PB: When setting its predetermined overhead application rate. Tasty Turtle estimated its overhead would...

See similar textbooks

Similar questions

Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Plata produces two models of microwave ovens with the following activity demands: The companys normal activity is 21,000 machine hours. Calculate the total overhead cost that would be assigned to Model X using an activity-based costing system: a. 230,000 b. 240,000 c. 280,000 d. 190,000
When setting its predetermined overhead application rate. Tasty Turtle estimated its overhead would be $75,000 and manufacturing would require 25,000 machine hours in the next year. At the end of the year, it found that actual overhead was $74,000 and manufacturing required 24,000 machine hours. Determine the predetermined overhead rate. What is the overhead applied during the year? Prepare the journal entry to eliminate the under- or over applied overhead.
The management of Winterroth Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours. Estimated at the Beginning of the Year Сapacity Actual Machine-hours 53,000 63,000 49,000 Manufacturing overhead $1,803,060 $1,803,060 $1,803,060 If the Corporation bases its predetermined overhead rate on capacity, then as shown on the income statement prepared for internal management purposes, the cost of unused capacity would be closest to: Multiple Choice $286,200 $400,680 $264,600 $136,080
an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,600 + $0.21 per machine-hour $38,300 + $1.50 per machine-hour $0.40 per machine-hour $94,800 + $1.50 per machine-hour $68,200 $ 23,440 $ 68,100 $ 9,400 $ 131,700 $ 69,900 During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a report showing the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e.,…
The controller of Hendershot Corporation estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: Wall Specialty Mirrors Windows Total expected units produced Total expected material moves Expected direct labor-hours per unit 11,900 1,710 1,190 1,610 8 The total materials handling cost for the year is expected to be $17,148.7O. If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the specialty windows is closest to: (Round your intermediate calculations to 4 decimal places.)
The controller of Ferrence Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: The total materials handling cost for the year is expected to be $16,486.40. If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost should be allocated to the specialty windows? (Round off your answer to the nearest whole dollar.) Question 12 options: $3,266 $9,274 $8,243 $6,595
Lifestyle Roofing uses job order costing and applies manufacturing overhead too individual projects using predetermined overhead rates. In the Installation Division, overhead is applied on the basis of direct labour hours, and in the Disposal Division, overhead is applied on the basis of debris tonnage hauled to the landfill. At the beginning of the current year, management made the following budget estimates to determine overhead application rates. Annual Estimates Direct labor Manufacturing overhead Direct labor hours Tons of Debris Installation Disposal $750,000 $120,000 $100,000 $36,000 25,000 10,000 300 Job #652 for Bees Grocery measured 8,348 square-feet. The job was started and completed in May. Information pertaining to this project is provided below. Job no. 652 (8,348 square-feet): Cost of material used on job Direct labor cost Direct labor hours Tons of debris Installation Disposal $30,000 $7,800 250 0 $1,000 $1,100 80 7 a. Determine the overhead rate that should be used by…
The controller of PUSO Co. estimates the amount of materials handling overhead cost that should be allocated to the firm's two product using the data below: Specialty Windows 7,000 Wall Mirrors Total expected units produced Total expected materials move Expected direct labor per unit 8,000 900 300 7 5 The total materials handling cost for the year is expected to be P38, 448. If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total material handling cost should be allocated to the specialty windows?
It has been suggested to the president to consider the use of an ABC costing system to allocate manufacturing overhead. Engineering studies have revealed the following information about estimated manufacturing activities for the coming year. Activity Cost Pool Estimated Overhead Cost Expected Activity Level Setups $530,000 200 setups Scrap $425,000 400 units Testing $325,000 10,000 tests Machine Related $1,370,000 60,000 machine hours Total $2,650,000 Calculate the separate predetermined overhead rates for each of the activities listed above.
Using the step method, what is the factory overhead rate of the cutting department? Galinganmo Corp has two service departments and two producing departments. The following are data available for the year 2021: FOH cost Estimated Area Labor Hrs Maintenance Security Cutting Assembly P129,000 105,000 416,000 380,000 2,900 1,100 2,000 1,600 Occupied 1,200 1,500 1,900 3,200 The maintenance costs are allocated based on estimated labor hours and security is allocated based on space occupied. The producing department uses machine hours with 50,000 for cutting and 25,000 for assembly to determine the factory overhead rate. P10.54 P8.32 O P20.35 P10.43
The management of a company would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work, using machine-hours as the allocation base. Machine Hours Manufacturing Overhead Estimated 50,000 $1,855,000 Capacity 53,000 $1,855,000 Actual 52,000 $1,855,000 If the company bases its predetermined overhead rate on capacity, then how much would they show as the cost of unused capacity on their income statement? (Do not add a comma in a number, e.g., write 1000 for one thousand.) Cost of unused capacity = $
Heidelberg Fabrication manufactures two products, G-09 and G-35: Units produced Direct materials cost per unit Machine-hours per unit Production runs per quarter Machine depreciation Setup labor Materials handling Total G-09 19,300 Required: $7 4 144 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow: a. Overhead rate b. Machine depreciation $ 104,220 52,110 41,688 $ 198,018 G-35 3,860 $19 Exercise 9-36 (Algo) Activity-Based Costing and Cost Driver Rates (LO 9-4) 7 72 a. Heidelberg currently applies overhead on the basis of machine-hours. What is the predetermined overhead rate for the quarter? Note: Round your answer to 2 decimal places. b. Heidelberg is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine-hours for machine depreciation, production runs for setup labor, and direct material dollars for materials handling. Compute the cost driver rates for the…