Concept explainers
Heitger Company is a job-order costing firm that uses activity-based costing to apply
Activity | Cost | Driver | Amount of Driver | |
Materials handling | $ 72,000 | Number of moves | 3,000 | |
Engineering | 165,000 | Number of change orders | 10,000 | |
Other overhead | 280,000 | Direct labor hours | 50,000 |
Heitger worked on four jobs in July. Data are as follows:
Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |
Beginning balance | $20,300 | $19,800 | $2,300 | $0 |
Direct materials | $6,500 | $8,900 | $12,700 | $9,800 |
Direct labor cost | $18,000 | $20,000 | $32,000 | $2,400 |
Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |
Number of moves | 44 | 52 | 29 | 5 |
Number of change orders | 30 | 40 | 20 | 20 |
Direct labor hours | 900 | 1,000 | 1,600 | 120 |
By July 31, Jobs 13-43 and 13-44 were completed and sold. Jobs 13-45 and 13-46 were still in process.
Required:
1. Calculate the activity rates for each of the three overhead activities. Round all activity rates to the nearest cent.
Materials handling rate | $fill in the blank 9d5ff300206c04d_1 per move |
Engineering rate | $fill in the blank 9d5ff300206c04d_2 per change order |
Other overhead rate | $fill in the blank 9d5ff300206c04d_3 per direct labor hour |
2. Prepare job-order cost sheets for each job showing all costs through July 31.
If an amount is zero, enter "0".
Heitger Company | ||||
Job-Order Cost Sheets | ||||
Job 13-43 | Job 13-44 | Job 13-45 | Job 13-46 | |
Balance, July 1 | $fill in the blank 65347b001054ff6_1 | $fill in the blank 65347b001054ff6_2 | $fill in the blank 65347b001054ff6_3 | $fill in the blank 65347b001054ff6_4 |
Direct materials | fill in the blank 65347b001054ff6_5 | fill in the blank 65347b001054ff6_6 | fill in the blank 65347b001054ff6_7 | fill in the blank 65347b001054ff6_8 |
Direct labor cost | fill in the blank 65347b001054ff6_9 | fill in the blank 65347b001054ff6_10 | fill in the blank 65347b001054ff6_11 | fill in the blank 65347b001054ff6_12 |
Materials handling | fill in the blank 65347b001054ff6_13 | fill in the blank 65347b001054ff6_14 | fill in the blank 65347b001054ff6_15 | fill in the blank 65347b001054ff6_16 |
Engineering | fill in the blank 65347b001054ff6_17 | fill in the blank 65347b001054ff6_18 | fill in the blank 65347b001054ff6_19 | fill in the blank 65347b001054ff6_20 |
Other overhead | fill in the blank 65347b001054ff6_21 | fill in the blank 65347b001054ff6_22 | fill in the blank 65347b001054ff6_23 | fill in the blank 65347b001054ff6_24 |
Total | $fill in the blank 65347b001054ff6_25 | $fill in the blank 65347b001054ff6_26 | $fill in the blank 65347b001054ff6_27 | $fill in the blank 65347b001054ff6_28 |
3. Calculate the balance in Work in Process on July 31.
$fill in the blank b6599f098fe606e_1
4. Calculate the cost of goods sold for July.
$fill in the blank b6599f098fe606e_2
5. What if Job 13-46 required no engineering change orders? What is the difference in the new cost of Job 13-46?
$fill in the blank b6599f098fe606e_3
How would the cost of the other jobs be affected?
Trending nowThis is a popular solution!
Step by stepSolved in 4 steps with 5 images
- Sultan Company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools: Activity Cost Pool Labor-related Purchase orders Parts management Board etching General factory Activity Measure Direct labor-hours Number of orders Number of part types Number of boards Machine-hours Expected Overhead Cost $ 233,600 $ 9,360 $ 80,000 $59,850 $ 236,500 Expected Activity 29,200 DLHS 234 orders 100 part types 1,710 boards 21,500 MHS Required: 1. Compute the activity rate for each of the activity cost pools. 2. The expected activity for the year was distributed among the company's four products as follows: Expected Activity Activity Cost Pool Labor-related (DLHS) Purchase orders (orders) Parts management (part types) Board etching (boards) General factory (MHs) Product A Product B Product C Product D 4,400 74 25 430 3,300 16,100 29 3,300 50 44 530 5,400 81 13 18 750 8,100 3,600 6,500 Using the…arrow_forwardTillman Corporation uses a Job Order Costing system and has two production departments--Molding and Assembly. The company applies manufacturing overhead to production orders on the basis of direct labor costs. Separate departmental predetermined overhead rates are used. Budgeted manufacturing costs for the year are as follows: Molding Assembling Direct Materials P700,000 P100,000 Direct Labor 200,000 800,000 Manufacturing Overhead 600,000 400,000 The actual material and labor costs charged to Job 432 were as follows: Direct Materials 25,000 Direct Labor Molding 8,000 Assembling 12,000 20,000 Tillman applies manufacturing overhead to production orders on the basis of direct labor cost using a departmental rate predetermined at the beginning of the year based on the annual budget. The total manufacturing cost associated with Job 432 should be?arrow_forwardSaratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in Its Purchasing Department to better understand how Purchasing Department labor costs are consumed by Individual jobs. To ald the study, the company provided the following data regarding its Purchasing Department and three of its many jobs: Number of employees Average salary per employee Weeks of employment per year Hours worked per week Practical capacity percentage $ 30,000 52 40 85% Requisition Processing 15 Bid Evaluation Inspection 45 30 Minutes per unit of the activity Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 6 3 2 2 1 3 Number of inspections 5 1 5 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job…arrow_forward
- Activity Rates and Product Costs using Activity-Based Costing Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budget activity costs and activity bases are as follows: Budgeted Activity Activity Cost Activity Base Casting $330,560 Machine hours Assembly 212,040 Direct labor hours Inspecting 26,100 Number of inspections Setup 39,000 Number of setups Materials handling 39,990 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 5,470 4,860 10,330 Direct labor hours 4,710 7,070 11,780 Number of inspections 1,320 420 1,740 Number of setups 210 50 260 Number of loads 730 200 930 Units produced 10,800 5,400 16,200 a. Determine the activity rate for each activity. If required, round the rate to the…arrow_forwardSaratoga Company manufactures jobs to customer specifications. The company is conducting a time-driven activity-based costing study in its Purchasing Department to better understand how Purchasing Department labor costs are consumed by individual jobs. To aid the study, the company provided the following data regarding its Purchasing Department and three of its many jobs: Number of employees Average salary per employee 11 $ 27,000 Weeks of employment per year Hours worked per week 52 40 Practical capacity percentage 85% Requisition Minutes per unit of the activity Processing 15 Bid Evaluation Inspection 45 30 Job X Job Y Job Z Number of requisitions processed Number of bid evaluations 6 3 2 4 3 5 Number of inspections 7 3 7 Now assume that Saratoga Company would like to answer the following "what if" question using its time-driven activity-based costing system: Assuming our estimated activity demands for all jobs in the next period will be as shown below, how will this affect our job…arrow_forwardComputing departmental overhead allocation rates The Oakman Company (see Short Exercise S19-1) has refined its allocation system by separating manufacturing overhead costs into two cost pools—one for each department. The estimated costs for the Mixing Department, $510,000, will be allocated based on direct labor hours, and the estimated direct labor hours for the year are 170,000. The estimated costs for the Packaging Department, $300,000, will be allocated based on machine-hours, and the estimated machine hours for the year are 40,000. In October, the company incurred 38,000 direct labor hours in the Mixing Department and 10,000 machine hours in the Packaging Department. Requirements Compute the predetermined overhead allocation rates. Round to two decimal places. Determine the total amount of overhead allocated in October.arrow_forward
- Facebo... PIUK Lea se Lux Corporation uses a job cost system and has two production departments,X and Y. Budgeted manufacturing costs for the year are: Department X DepartmentY on Direct materials $1400,000 $200,000 Direct manufacturing labor $400,000 $1600,000 Manufacturing overhead $1200,000 $800,000 The actual material and labor costs charged to Job #512 were as follows: Total Direct maternals: $50,000 Direct labor: Department X Department Y s 16,000 $24,000 $40,000 Lux applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. For Department X, the manufacturing overhead allocation rate is: Select one: a. 300% b. 33% C. 100% d. 66%% 23°C uaioarrow_forwardJob Order Costing for a Service Company The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 45% of media purchases. On August 1, the four advertising projects had the following accumulated costs: August 1 Balances $59,100 17,700 41,400 25,400 $143,600 Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages Total During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts: Vault Bank Take Off Airlines Sleepy Tired Hotels Tastee Beverages…arrow_forwardif job 10 consists of 50 units of product, what is the unit cost of this job?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education