Accounting: What the Numbers Mean
Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
Question
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Chapter 13, Problem 13.30C
To determine

(A)

Introduction:

Fixedmanufacturing overhead rate means that the cost has been incurred in the factory for using the machine for hourly basic.

To choose:

Predetermine fixed manufacturing overhead rate.

Expert Solution
Check Mark

Answer to Problem 13.30C

Machine hour rate = 3.25 per hr.

Explanation of Solution

Machine hour rate =Total fixed overhead  Total machine worked=31200096000=3.25 per hr.

To determine

(B)

Introduction:

Fixed overhead cost means that expense which have been incurred in past and these expenses will not change even production increase or not.

To choose:

Draw a graph of a fixed manufacturing expense.

Expert Solution
Check Mark

Explanation of Solution

Fixed overhead always same except some condition

Accounting: What the Numbers Mean, Chapter 13, Problem 13.30C , additional homework tip  1

To determine

(C)

Introduction:

Variable overhead varies with the production unit, because these expenses will be change with production. If production unit increase then variable expense also be increased and vice-versa

To choose:

Draw a graph of a variable manufacturing expense

Expert Solution
Check Mark

Answer to Problem 13.30C

Accounting: What the Numbers Mean, Chapter 13, Problem 13.30C , additional homework tip  2

Explanation of Solution

Accounting: What the Numbers Mean, Chapter 13, Problem 13.30C , additional homework tip  3

To determine

(D)

Introduction:

Raw material consumed means the material which has been specially used for the manufacturing process for output the final product.

To choose:

Prepare"T space" ledger account. Explain the relationship between raw material purchased and raw material consumed.

Expert Solution
Check Mark

Answer to Problem 13.30C

Consumed raw material = 252000

Explanation of Solution

Raw material consumed account

    Date Particular Amount ($)Date Particular Amount ($)
    To Balance b/d
    To customer (purchase)
    39,000
    240,000
    By Consumed raw material(bal. fig)
    By balance c/d
    252000
    29000

Raw material purchase means total raw material purchase during the last year for the consumption purpose, but this is not compulsory that this raw material must be used in the current period.

Raw material consumed means this is material which has been used for the manufacturing process out of raw material purchased during the current year or form the opening stock.

Raw material consumed = opening stock + purchased − closing stock.

To determine

(E)

Introduction:

Manufacturing expense applied on the work in process, because those goods which have not in complete form. On these good some all types' expense has been incurred.

To choose:

Calculate the variable manufacturing expense on the applied work in process.

Expert Solution
Check Mark

Answer to Problem 13.30C

For opening working in process = $33000 × 0.7708 = $25436

For closing working in process = $51500 × 0.7708 = $39696

Explanation of Solution

Total variable cost incurred = $480000$16 per direct labour×$6 per variable cost=$180000

Total goods manufacturing = $233500

Total manufacturing goods = total variable cost

$233500 = $180000

So, calculate for $1 goods = $180000$233500=0.7708

So this is the cost for opening work in progress

For opening working in process = $33000 × 0.7708 = $25436

For closing working in process = $51500 × 0.7708 = $39696

To determine

(F)

Introduction:

Fixed overhead expense means that expense has been incurred before starting the production these expenses not changed with the production. This applied on the product at the basic rate. This rate is calculated by the absorption method. Some time called black rate method.

To choose:

Calculate the fixed manufacturing expense on the applied work in process.

Expert Solution
Check Mark

Answer to Problem 13.30C

For opening finished goods = $104000 × 0.690 = $71760

For closing finished goods = $122000 × 0.690 = $84180

Explanation of Solution

Total fixed cost incurred = $31200096000 hour=$3.25

Total manufacturing goods = total variable cost

$312000= $215500

So, calculate for $1 goods = $215500$312000=$0.690

So this is the cost for opening work in progress

For opening finished goods = $104000 × 0.690 = $71760

For closing finished goods = $122000 × 0.690 = $84180

To determine

(G)

Introduction:

Work in process means that some goods has been manufacturing but yet not complete up to final product.

To choose:

Prepare T-accounts for work in process to calculate the cost of goods manufacturing

Expert Solution
Check Mark

Answer to Problem 13.30C

Cost of goods manufacturing $233500

Explanation of Solution

Prepare the T-account for the work in process tocalculate the cost of goods manufacturing

Work in process

    ParticularAmountParticularAmount
    To Balance b/d
    To cost of material consumed
    33,000
    252000
    285000
    By cost of goodsmanufacturing (Balfig)
    By Balance c/d
    233500
    51500
    285000
To determine

(H)

Introduction:

Cost of goods sold means those goods that have completed all stage and ready to sale. For those goods company calculate the cost of goods sold applied all type of expense which incur for the manufacturing form the raw material to finished goods.

To choose:

Prepare a T-accounts for finished goods to calculate the cost of goods sold.

Expert Solution
Check Mark

Answer to Problem 13.30C

Cost of goods sold = $215500

Explanation of Solution

T-accounts for finished goods to calculate the cost of goods sold

Cost of goods sold for finished goods

    ParticularAmountParticularAmount
    To Balance b/d
    To cost of goods manufacturing
    104000
    233500
    285000
    By cost of goods sold (Bal fig)
    By Balance c/d
    215500
    122000
    285000
To determine

(i)

Introduction:

Fixed overhead expense means that expense has been incurred before starting the production these expenses not changed with the production. This applied on the product at the basic rate. This rate is calculated by the absorption method. Some time called black rate method.

To choose:

What is the treatment of used hour in the balance sheet and profit and loss?

Expert Solution
Check Mark

Answer to Problem 13.30C

Unfavorable fixed cost variance is going to income statement account, which is $26000

Explanation of Solution

As per the company data which is provided in the question, company used the machine for 96,000 hours, but due to some reasons company used only 88000 hours, company total fixed expenditure $312,000 for 96000 hours but company used the machine only 88000 hours.

This is a variance of fixed cost

As per the budget total fixed cost = $312,000 for 96000 hours.

Fixed cost per hour = 31200096000=3.25 per hour

As per the given information in the question machine only works 88000 hours

So, the expense will be only = 88,000 hour × 3.25 per hour

= $286,000

Extra expense will be going to financial profit and loss = $312,000 - $286,000

= $26,000

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