Arensky Company uses normal costing to account for overhead in its job costing system. There are 2 departments in the company: Designing and Machining. The Designing Dept is labor intensive; the Machining Dept. is machine intensive. (OH = Overhead; DLH = Direct Labor Hours; MH = Machining Hours.) The budget for 2019 is as follows: Actual results are as follows: a. Est. OH Est. DLH Est. MH b. C. Actual OH Actual DLH Actual MH Designing $2,000,000 40,000 hours 20,000 hours Designing $2,100,000 41,500 hours 19,800 hours Machining $5,600,000 10,000 hours 70,000 hours Machining $5,650,000 11,000 hours 72,000 hours Using the most logical allocation base, calculate the OH Allocation Rate for eac department. Be sure to state your final answer in proper units. For each department, calculate how much OH is allocated. For each department, give the journal entry to record over- or under-allocated overhead.

Arensky Company uses normal costing to account for overhead in its job costing system. There are 2 departments in the company: Designing and Machining. The Designing Dept is labor intensive; the Machining Dept. is machine intensive. (OH = Overhead; DLH = Direct Labor Hours; MH = Machining Hours.) The budget for 2019 is as follows: Actual results are as follows: a. Est. OH Est. DLH Est. MH b. C. Actual OH Actual DLH Actual MH Designing $2,000,000 40,000 hours 20,000 hours Designing $2,100,000 41,500 hours 19,800 hours Machining $5,600,000 10,000 hours 70,000 hours Machining $5,650,000 11,000 hours 72,000 hours Using the most logical allocation base, calculate the OH Allocation Rate for eac department. Be sure to state your final answer in proper units. For each department, calculate how much OH is allocated. For each department, give the journal entry to record over- or under-allocated overhead.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter16: Job Order Costing

Section: Chapter Questions

Problem 2CMA: John Sheng, a cost accountant at Starlet Company, is developing departmental factory overhead...

See similar textbooks

Similar questions

Please use the information from this problem for these calculations. After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: Box Springs estimates there will be four orders in the next year, and those jobs will involve: What is the total cost of the jobs?
John Sheng, a cost accountant at Starlet Company, is developing departmental factory overhead application rates for the companys Tooling and Fabricating departments. The budgeted overhead for each department and the data for one job are as follows: Using the departmental overhead application rates, total overhead applied to Job 231 in the Tooling and Fabricating departments will be: a. 225. b. 303. c. 537. d. 671.
Please use the information from this problem for these calculations. After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: It estimates there will be five orders in the next year, and those jobs will involve: What is the total cost of the jobs?
Ripley, Inc., costs products using a normal costing system. The following data are available for last year: Overhead is applied on the basis of direct labor hours. Required: 1. What was the predetermined overhead rate? 2. What was the applied overhead for last year? 3. Was overhead over- or underapplied, and by how much? 4. What was the total cost per unit produced (carry your answer to four significant digits)?
Swifty Corporation provide the information from its accounting records for 2019: Expected production 80000 labor hours, Actual production 76000 labor hours, Budgeted overhead 1500000, Actual overhead 1440000. How much is the overhead application rate if Swifty Corporation bases it on direct labor hours?
1. Consider (a) actual costing, (b) normal costing, and (c) a mixed costing approach, which is a variation from normal costing where budgeted rates for direct costs are used. For each of the costing approaches mentioned, calculate the direct-cost rate and the indirect-cost rate per professional labor-hour for 2019. 2. Koffler Legal & Consulting Services PLLC.'s provided a legal consulting service to Magnolia Cosmetics at 2019. This job was budgeted to take 150 hours of professional labor time to complete. However, the actual professional labor time spent on the job was found to be 160 hours. Considering this information, compute the cost of the consulting service provided to Magnolia Cosmetics using (a) actual costing, (b) normal costing, and (c) the mixed costing approach, which is a variation from normal costing where budgeted rates for direct costs are used. Explain any differences in the job cost.
National Marketing Corp. uses a job-order costing system. It has three production departments, X, Y, and Z. The manufacturing cost budget for 2019 is as follows: Dept. X Dept. Y Dept. Z Direct Materials 600,000 400,000 200,000 Direct Labor 200,000 500,000 400,000 Manufacturing Overhead 600,000 100,000 200,000 For Job No. 01-90 which was completed in 2019, direct materials cost was P75,000 and direct labor cost was as follows: Dept. X P40,000 Dept. Y 100,000 Dept. Z 20,000 The corporation applies manufacturing overhead to each order on the basis of direct labor cost, using departmental rates predetermined at the beginning of the year based on the manufacturing cost budget. The total manufacturing cost of Job No. 01-90 which was completed in 2019 is
Lake Balboa Manufacturing Company decides to relate total factory overhead costs to direct labor hours (DLH) to develop a cost-volume formula in the form of y = a + bx. Observations from 2019 are collected. They are given and on the excel file. Month Direct Labor Hours Factory Overhead January 9,000 13,000 February 19,000 20,000 March 11,000 14,000 April 14,000 16,000 May 23,000 25,000 June 12,000 20,000 July 12,000 20,000 August 22,000 23,000 September 7,000 14,000 October 13,000 22,000 November 15,000 18,000 December 17,000 18,000 Total 174,000 hours $225,000 In October of 2020, the company used 13,000 direct labor hours. Using the cost formula for factory overhead calculated using the High-Low Method, calculate the factory overhead for October 2020.
Carla Vista Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,804,000 902,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $113,600, and 1819C, with total direct labour charges of $390,100. Machine hours were 287 hours for 17688 and 647 hours for 1819C. Direct materials issued for 1768B amounted to $220,000, and for 1819C they amounted to $420,500. Total charges to the Manufacturing Overhead Control account for the year were $898,500, and direct labour charges made to all jobs amounted to $1,583,600, representing 247,500 direct labour hours. There were no beginning inventories. In…
Dustin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dustin allocates manufacturing overhead costs using direct manufacturing labor costs. Dustin provides the following information: Read the requirements2. Requirement 1. Compute the actual and budgeted manufacturing overhead rates for 2017.(Enter your answer as a number [notas a percentage] rounded to two decimal places, X.XX.) Actual manufacturing overhead rate = Budgeted manufacturing overhead rate = Requirement 2. During March, the job-cost record for Job 626 contained the following information: Direct materials used $60,000 Direct manufacturing labor costs $30,000 Compute the cost of Job 626 using (a) actual costing and (b) normal costing. Actual Costing Direct materials Direct manufacturing labor costs…
Mission Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below (CMA adapted) Multiple Choice Units produced Material moves per product line Direct labor-hours per product line Budgeted material handling costs: $594,000 Under a traditional costing system that allocates overhead on the basis of direct labor-hours, the materials handling costs allocated to one unit of Wall Mirrors would be O $1000 $1.350 $5,400 Wall Mirrors 210 5 1,050 $22.000 Specialty Nindows 25 46
Sage Products Ltd manufactures goods which could involve any or all of three productiondepartments. These departments are simply entitled X, Y and Z. A direct wages cost percentageabsorption rate for the recovery of production overheads for each department is applied toindividual job costs.Details from the company’s budgets for the year ended 31 March 2021 are as follows: Dept X Dept Y Dept ZIndirect materials $23,000 $35,000 $57,000Indirect wages $21,000 $34,000 $55,000Direct wages $140,000 $200,000 $125,000 Direct labour hours…