FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- 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 51,600 machine hours per year, which represents 25,800 units of output. Annual budgeted fixed factory overhead costs are $258,000 and the budgeted variable factory overhead cost rate is $2.50 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 19,500 units, which took 40,600 machine hours. Actual fixed factory overhead costs for the year amounted to $251,600 while the actual variable overhead cost per unit was $2.40. Assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (CGS) using the following percentages: 10%, 20%, and 70%, respectively. Provide the proper journal entry to close out the…arrow_forwardCompute the predetermined variable overhead rate and the predetermined fixed overhead rate. (Round answers to 2 decimal places, eg. 2.75.) Predetermined Overhead Rate (b) eTextbook and Media Compute the applied overhead for Crane for the year. Overhead Applied Variable $ 2.50 Fixed Attempts: 1 of 3 usedarrow_forwardHannibal 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 $237,500 per year, consisting of $0.22 per ton variable cost and $187,500 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 64% of the Transport Services Department's capacity and the Southern Plant requires 36% During the year, the Transport Services Department actually hauled 126,000 tons of ore to the Northern Plant and 67,900 tons to the Southern Plant. The Transport Services Department Incurred $363,000 In cost during the year, of which $54,000 was variable and $309,000 was fixed. Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to…arrow_forward
- Der Company uses a standard cost system in which it applies manufacturing overhead on the basis of direct labor-hours. Two direct labor-hours are required for each unit produced. The budgeted activity was set at 9,000 units. Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this cost was fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed manufacturing overhead cost was $28,000. The fixed overhead production volume variance for the period was: a) $750 unfavorable. b) $2,500 unfavorable. c) $1,500 unfavorable. d) $1,000 unfavorable.arrow_forwardMorris Company allocates manufacturing overhead based on machine hours. Each chair produced should require 4 machine hours. According to the static budget, the following is expected to incur: 2,200 machine hours per month (550 chairs x 4 hours per chair) $11,440 in variable manufacturing overhead costs $9,000 in fixed manufacturing overhead costs During January, Morris Company actually used 2,100 machine hours to make 510 chairs. The company spent $6,800 in variable manufacturing overhead costs and $9,100 in fixed manufacturing overhead costs. What is the fixed overhead cost variance?arrow_forwardMcniff Corporation makes a range of products. The company's predetermined overhead rate is $17 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead $ 80,000 Fixed manufacturing overhead $ 260,000 Direct labor-hours 20,000 Management is considering a special order for 710 units of product O96S at $65 each. The normal selling price of product O96S is $76 and the unit product cost is determined as follows: Direct materials $ 38.00 Direct labor 17.00 Manufacturing overhead applied 17.00 Unit product cost $ 72.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special…arrow_forward
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