Greetings, Inc. - Job Order Costing Essay examples

Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

ACCT505 Part B Capital Budgeting problem Clark Paints Data: Cost of new equipment $200,000 Expected life of equipment in years 5 yrs Disposal value in 5 years $40,000 Life production - number of cans 5,500,000 Annual production or purchase needs $1,100,000 Initial training costs Number of workers needed 3 Annual hours to be worked per employee 2000 hrs Earnings per hour for employees $12 Annual health benefits per employee $2,500

Shaving 5% off the estimated direct labor-hours in the predetermined overhead rate will result in an artificially high overhead rate. The artificially high predetermined overhead rate is likely to result in overapplied overhead for the year. The cumulative effect of overapplying the overhead throughout the year is all recognized in December when the balance in the Manufacturing Overhead account is closed out to Cost of Goods Sold. If the balance were closed out every month or every quarter, this effect would be

2. At the end of a period, after overhead has been applied to all jobs, manufacturing overhead has a credit balance of $900. We say that overhead is:

1. As Exhibit 1 shown, I first calculate the predetermined overhead rate, which is $15.57 per direct labor hour. And I distributed the dollar amount to different proportion based on Direct-Labor hours to get the overhead cost. Sum the overhead and direct cost to get the total cost; this will be the total cost of producing a batch of beer label. Therefore, we need to divide them up by the bottle per batch in order to know the cost per each bottle for each label.

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Blanco Company estimates that its variable manufacturing overhead (all requiring cash expenditures) is $32 per direct labor hour. The total fixed manufacturing overhead of $1,881,120 per month includes depreciation on the factory building of $120,000 per month and depreciation on the factory equipment of $30,000 per month for total depreciation of $150,000 per month. (Thus, the cash spent for fixed manufacturing overhead is $1,731,120 ($1,881,120 – $120,000 – $30,000) per month.) Cash disbursements for manufacturing overhead occur in the same month in which the company incurs the cost. Be sure to show the calculation of the average predetermined overhead rate for the quarter as a whole only—total budgeted manufacturing overhead cost

3. Briefly describe how the current production cost assignment system works. What are the consumption ratios (activity percentages) for assigning manufacturing overhead to each product at present?

uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company 's manufacturing overhead data:

Based on the given info we calculate Overhead Allocation Rate =Overhead for PeriodAllocation Base for Period for each allocation bases vis. Sales, Direct Material and Direct Labor

b. Use your answer to part A to determine the total annual indirect cost assigned to:

1. Define and explain the meaning of a predetermined manufacturing overhead rate that is applied in a job-order costing system.

a. Assuming the most current operational cost levels, what sales must it generate to recoup the above investment?

2. What is the total cost? How much of the total cost are labor costs? Capital costs?

ImageFirst Signs will anticipate a savings of $99,300 per year. This calculation is based on labor costs, space utilization, reduction in rework, and inventory costs. These calculations can be seen in Table 8 below. Labor cost is calculated in two fold. First by multiplying the number of operators (17), number of weeks per year (50), average hourly cost per employee ($16), and the average number of hours anticipated to be saved with the implementation of the deliverables (2 per operator). Second by multiplying the number of shipping and receiving operator (1), number of weeks per year (50), average hourly cost per employee ($16), average number of hours anticipated to be saved with the implementation of the deliverables (5). Space utilization was calculated by considering the average monetary impact of bringing in two new machines. Per Dave, the facility needs to be preparing for two machines. One will be arriving in April and the other one is anticipated to arrive late summer. Reduction in rework was calculated by multiplying an average cost to fix a sign ($250) by the number of months in a year (12) by the average number of defects needed to be fixed per month (5). Lastly, inventory costs were calculated by considering the average number of extra material on hand (20) by the average cost per foot of the material. As seen below in Figure 19, ImageFirst can anticipate an 85% ROI for this