Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 12, Problem 4E
Exercise 4-4A Pooling
Ware Manufacturing Company produced 2,000 units of inventory in January 2018. It expects to produce an additional 14,000 units during the remaining 11 months of the year. In other words, total production for 2018 is estimated to be 16,000 units. Direct materials and direct labor costs are $64 and $52 per unit, respectively. Ware expects to incur the following manufacturing overhead costs during the 2018 accounting period:
| Production supplies | $ 20,000 |
| Supervisor salary | 160,000 |
| Depreciation on equipment | 75,000 |
| Utilities | 20,000 |
| Rental fee on manufacturing facilities | 45,000 |
Required
a. Combine the individual overhead costs into a cost pool and calculate a predetermined overhead rate assuming the cost driver is number of units.
b. Determine the cost of the 2,000 units of product made in January.
c. Is the cost computed in Requirement b actual or estimated? Could Ware improve accuracy by waiting until December to determine the cost of products? Identify two reasons that a manager would want to know the cost of products in January. Discuss the relationship between accuracy and relevance as it pertains to this problem.
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Discussion Question
Epsilon Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2018, they estimated total manufacturing overhead costs at $1,015,000, and they estimated total direct labor costs at $1,400,000.
The administration and selling overheads are to be absorbed in each job cost at 15% of production cost. Distribution cost should be added to each job according to quotes from outside carriage companies.
The company wishes to quote for job # W500. Data for the job are as follows:
Direct materials cost $169,450Direct labour cost $230,000Direct labour hours 400 hoursSpecial Design Cost $12,300Distribution quote from haulage company $17,930Units of product produced 250 crates
a) Compute Epsilon Manufacturing Company predetermined manufacturing overhead rate for 2018.b) How much manufacturing overhead was allocated to Job #W500?c) Calculate the total cost & quotation price of Job #W500, given that a…
The following data are provided for Matibag Corporation:
a. Sales: Sales through June 30, 2019, the first 6 months of the current year, are 24,000
units. Expected sales for the full year are 60,000 units. Actual sales in units for May
and June and estimated unit sales for the next 4 months are as follows:
Direct Materials
101
211
242
b. Direct Materials: At each month end, Villanueva wants to have sufficient materials on
hand to produce the next month's estimated sales. Data regarding materials are as
follows:
c. Direct Labor:
July
August
September
October
May
June
Process
Forming
Assembly
Finishing
4,000
4,000
5,000
6,000
7,000
7,000
Units of Material Cost per Unit
Required
6
4
2
Php 0.40
3.60
1.20
Hours per Unit
80
2.00
0.25
Units in Inventory,
June 30, 2019
Hourly Labor
Rate
P 8.00
5.50
6.00
35,000
32,000
14,000
Discussion Question
Epsilon Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2018, they estimated total manufacturing overhead costs at $1,015,000, and they estimated total direct labor costs at $1,400,000.
The administration and selling overheads are to be absorbed in each job cost at 15% of production cost. Distribution cost should be added to each job according to quotes from outside carriage companies. The company wishes to quote for job # W500. Data for the job are as follows:
Direct materials cost $169,450Direct labour cost $230,000Direct labour hours 400 hoursSpecial Design Cost $12,300Distribution quote from haulage company $17,930
Units of product produced 250 crates
a) Compute Epsilon Manufacturing Company predetermined manufacturing overhead rate for2018.b) How much manufacturing overhead was allocated to Job #W500?c) Calculate the total cost & quotation price of Job #W500, given that a…
Chapter 12 Solutions
Survey Of Accounting
Ch. 12 - 1.What is a cost object? Identify four different...Ch. 12 - Prob. 2QCh. 12 - 3.If the cost object is a manufactured product,...Ch. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - 10.Why are some manufacturing costs not directly...
Ch. 12 - Prob. 11QCh. 12 - 12.On January 31, the managers of Integra, Inc....Ch. 12 - 13.Respond to the following statement: The...Ch. 12 - Prob. 14QCh. 12 - Define the term cost pool. How are cost pools...Ch. 12 - LO 4-1Exercise 4-1A Direct versus indirect costs...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Exercise 4-4APooling overhead cost Ware...Ch. 12 - Prob. 5ECh. 12 - Exercise 4-5A Allocating overhead cost among...Ch. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Exercise 4-6AAllocating overhead costs among...Ch. 12 - Exercise 4-9AAllocating to solve a timing problem...Ch. 12 - Prob. 11ECh. 12 - Exercise 4-11AHow the allocation of fixed cost...Ch. 12 - Prob. 13ECh. 12 - Problem 4-17A Cost accumulation and allocation...Ch. 12 - Problem 4-18A Selecting an appropriate cost driver...Ch. 12 - Problem 4-19A Cost allocation in a service...Ch. 12 - Prob. 17PCh. 12 - Problem 4-21A Allocation to accomplish smoothing...Ch. 12 - Problem 4-22A Allocating indirect costs between...Ch. 12 - Prob. 20PCh. 12 - Prob. 1ATCCh. 12 - Prob. 2ATCCh. 12 - ATC 4-3 Research Assignment Using real-world data...Ch. 12 - Prob. 4ATCCh. 12 - Prob. 5ATC
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