Hannibal Steel Company's Transport Services Department provides trucks to haul ore from the company's mine to its two steel mills- the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44%. During the year, the Transport Services Department actually hauled 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed.

Hannibal Steel Company's Transport Services Department provides trucks to haul ore from the company's mine to its two steel mills- the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44%. During the year, the Transport Services Department actually hauled 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...

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Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold through specialty golf shops. The company is in the process of developing itsoperating budget for the coming year. Selected data regarding the companys two products areas follows: Manufacturing overhead is applied to units using direct labor hours. Variable manufacturing overhead Ls projected to be 25,000, and fixed manufacturing overhead is expected to be15,000. The estimated cost to produce one unit of the laminated putter head is: a. 42. b. 46. c. 52. d. 62.
Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: Four welding units, with a lease cost of 12,000 per year per unit Six welding employees each paid a salary of 50,000 per year (A total of 9,000 welding hours are supplied by the six workers.) Welding supplies: 300 per job Welding hours: Three hours used per job During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 676. Lease cost: 48,000 Salaries: 315,000 Parts and supplies: 805,000 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. 2. Prepare a performance report for the welding activity. 3. What if welders were hired through outsourcing and paid 30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.
Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments-Molding and Assembly. The Molding Department employs 20 people, and the Assembly Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Molding Department arc budgeted at $190,000, and the Assembly Department costs are budgeted at $80,000. Two support departments-Engineering and General Factory-directly support the two production departments and have budgeted costs of $216,000 and $370,000, respectively. The production departments' overhead rates cannot be determined until the support departments' costs are properly allocated. The following schedule reflects the use of the Engineering Department's and General Factory Department's output by the various departments. Engineering General Factory Molding Assembly Engineering hours - 2,000 2,000…
A company has a Trucking Services Department that provides transportation to haul a rare mineral from the company's mine to its two mills-the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department consists of $0.32 per ton variable cost and $355,000 of fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 70% of the Trucking Services Department's capacity and the Southern Plant requires 30%. During the year, the Trucking Services Department actually hauled 120,000 tons of mineral to the Northern Plant and 60,000 tons to the Southern Plant. The Trucking Services Department incurred $384,000 in cost during the year, of which $54,000 was variable cost and $330,000 was fixed cost. How much of the Trucking Services Department's variable costs should be charged to the Northern plant? O $36,000 O $38,400 O $57,600 O None of the listed answers O $28,800 How much of the Trucking…
Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 20 people, and the Assembly Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Molding Department are budgeted at $190,000, and the Assembly Department costs are budgeted at $80,000. Two support departments—Engineering and General Factory—directly support the two production departments and have budgeted costs of $216,000 and $370,000, respectively. The production departments' overhead rates cannot be determined until the support departments' costs are properly allocated. The following schedule reflects the use of the Engineering Department's and General Factory Department's output by the various departments. Engineering General Factory Molding Assembly Engineering hours — 2,000 2,000 8,000 Square feet…
Zepol Company is planning to produce 600,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each drill requires 0.75 standard hour of labor for completion. The total budgeted overhead was $1,777,500. The total fixed overhead budgeted for the coming year is $832,500. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. Actual results for the year are: Actual Production (units) 592,000 Actual variable overhead $928,000 Actual direct labor hours 446,000 Actual fixed overhead $935,600 Required: Compute the applied fixed overhead. Compute the fixed overhead spending and volume variances. Compute the applied variable overhead. Compute the variable overhead spending and efficiency variances.
Zepol Company is planning to produce 600,000 power drills for the coming year. The company uses direct labor hours to assign overhead to products. Each drill requires 0.75 standard hour of labor for completion. The total budgeted overhead was $1,777,500. The total fixed overhead budgeted for the coming year is $832,500. Predetermined overhead rates are calculated using expected production, measured in direct labor hours. Actual results for the year are: Actual production (units) 594,000 Actual variable overhead $928,000 Actual direct labor hours (AH) 446,000 Actual fixed overhead $835,600 Required: 1. Compute the applied variable overhead.$fill in the blank 6 2. Compute the applied fixed overhead.$fill in the blank 1 3. Compute the fixed overhead spending and volume variances. Enter amounts as positive numbers and select Favorable or Unfavorable. Spending variance $fill in the blank 2 Unfavorable Volume variance $fill in the blank 4 Unfavorable
Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments-Molding and Assembly. The Molding Department employs 15 people, and the Assembly Department employs 77 people. Each person in these two departments works 1,910 hours per year. The production-related overhead costs for the Molding Department are budgeted at $197,000, and the Assembly Department costs are budgeted at $97,000. Two support departments-Engineering and General Factory-directly support the two production departments and have budgeted costs of $248,000 and $405,000, respectively. The production departments' overhead rates cannot be determined until the support departments' costs are properly allocated. The following schedule reflects the use of the Engineering Department's and General Factory Department's output by the various departments. General Factory Molding Assembly 7,600 Engineering hours Square feet 445,880 69,080 For all requirements, round…
TIGER EQUIPMENT INC. Factory Overhead Cost Variance Report-Welding Department For the Month Ended May 31 Normal capacity for the month 8,400 hours Actual production for the month 8,860 hours Variances Budget Actual Favorable Unfavorable Variable costs: Indirect factory wages Power and light Indirect materials Total variable cost Fixed costs: Supervisory salaries Depreciation of plant and equipment Insurance and property taxes Total fixed cost Total factory overhead cost Total controllable variances Net controllable variance-unfavorable Volume variance-favorable: Excess hours used over normal at the standard rate for fixed factory overhead: Total factory overhead cost variance-favorable
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,100 machine hours per year, which represents 25,050 units of output. Annual budgeted fixed factory overhead costs are $250,500 and the budgeted variable factory overhead cost rate is $2.00 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,500 units, which took 39,100 machine hours. Actual fixed factory overhead costs for the year amounted to $246,100 while the actual variable overhead cost per unit was $1.90. Based on the information provided above, provide the appropriate journal entries: (a) to record the overhead cost variances for the period (thereby closing out the balance in the Factory Overhead account), and (b) to close the variance accounts to the Cost of Goods Sold (CGS) account at the end of the period. (Do not round…
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced.Practical capacity for the plant is defined as 50,000 machine hours per year, which represents25,000 units of output. Annual budgeted fixed factory overhead costs are $250,000 and the budgeted variable factory overhead cost rate is $4 per unit. Factory overhead costs are applied on thebasis of standard machine hours allowed for units produced. Budgeted and actual output for theyear was 20,000 units, which took 41,000 machine hours. Actual fixed factory overhead costs forthe year amounted to $245,000, while the actual variable overhead cost per unit was $3.90. Whatwas: (a) the fixed overhead spending (budget) variance for the year, and (b) the production volume variance for the year? Round each answer to the nearest whole dollar, and indicate whethereach variance was favorable (F) or unfavorable (U).
Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 7,700 hours. Variable costs: Indirect factory wages $22,330 Power and light 15,862 Indirect materials 13,552 Total variable cost $51,744 Fixed costs: Supervisory salaries $14,700 Depreciation of plant and equipment 37,710 Insurance and property taxes 11,500 Total fixed cost 63,910 Total factory overhead cost $115,654 During May, the department operated at 8,200 standard hours. The factory overhead costs incurred were indirect factory wages, $24,020; power and light, $16,590; indirect materials, $14,700; supervisory salaries, $14,700; depreciation of plant and equipment, $37,710; and insurance and property taxes, $11,500. Required: Prepare a factory overhead cost…