Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 2, Problem 21P
PROBLEM 2-21 Plant wide Versus Multiple Predetermined
Mason Company has two manufacturing departments—Machining and Assembly. The company considers all of its manufacturing overhead costs to be fixed costs. It provided the following estimates at the beginning of the year as well as the following information with respect to Jobs A and B:
| Estimated Data | Machining | Assembly | y Total |
| Manufacturing overhead | $500,000 | $100,000 | $600,000 |
| Direct labor-hours | 10,000 | 50,000 | 60,000 |
| Machine-hours | 50,000 | 5,000 | 55,000 |
| JobA | Machining Assembly Total | ||
| Direct labor-hours | 5 | 10 15 |
|
| Machine-hours | 11 | 2 13 |
|
| JobB | Machining Assembly Total | ||
| Direct labor-hours | 4 | 59 | |
| Machine-hours | 12 | 3 15 |
|
Required:
- If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much
manufacturing overhead cost would be applied to Job A? JobB9 - Assume that Mason Company uses departmental predetermined overhead rates. The Machining Department is allocated based on machine-hours and the Assembly Department is allocated based on direct labor-hours. How much manufacturing overhead cost would be applied to Job A? Job B?
- If Mason multiplies its
job costs by a markup percentage to establish selling prices, how might plantwide overhead allocation adversely7 affect the company’s pricing decisions?
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Students have asked these similar questions
Question No.7
Lyon Corporation has identified the following overhead costs and activity drivers for next year:
Overhead Items
Expected Costs
Activity Drivers
Expected Qty.
Set-up costs
Ordering costs
Maintenance
Power
Rs.150,000
40,000
200,000
20,000
Number of set-ups
Number of orders
Machine hours
Kilowatt hours
1,000
10,000
16,000
100,000
The following are two of the jobs completed during the year:
Job XX Job YY
Direct materials Rs.2,250 Rs.2,500
Direct labor Rs.3,000 Rs.1875
Units complete 375 300
Direct labor hours 90 110
Number of set-ups 6 8
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Problem 2-24 (Algo) Plantwide Versus Multiple Predetermined Overhead Rates [LO2-1, LO2-2]
Mason Company has two manufacturing departments-Machining and Assembly. All of the company's manufacturing overhead costs
are fixed costs. It provided the following estimates at the beginning of the year as well as the following information for Jobs A and B:
Estimated Data
Manufacturing overhead
Direct labor-hours
Machine-hours
Job A
Direct labor-hours
Machine-hours.
Job B
Direct labor-hours
Machine-hours
Machining
$ 726,000
11,000
66,000
Machining Assembly
5
10
11
Machining
4
12
Assembly
$ 121,000
66,000
6,000
2
1. Manufacturing overhead applied Job A
1. Manufacturing overhead applied Job B
2. Manufacturing overhead applied Job A
2. Manufacturing overhead applied Job B
Assembly
5
3
Total
15
13
Total
9
15
Required:
1. If Mason Company uses a plantwide predetermined overhead rate with direct labor-hours as the allocation base, how much
manufacturing overhead cost would be applied to Job A? Job…
Problem 2-16 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3]
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:
Direct labor-hours required to support estimated production
60,000
Machine-hours required to support estimated production
30,000
Fixed manufacturing overhead cost
$ 180,000
Variable manufacturing overhead cost per direct labor-hour
$ 1.00
Variable manufacturing overhead cost per machine-hour
$ 2.00
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials
$ 213
Direct labor cost
$ 323
Direct labor-hours
15
Machine-hours
5
Required:
1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total…
Chapter 2 Solutions
Managerial Accounting
Ch. 2.A - EXERCISE 2A-1 Activity-Based Absorption Costing...Ch. 2.A - EXERCISE 2A-2 Activity-Based Absorption Costing as...Ch. 2.A - EXERCISE 2A-3 Activity-Based Absorption Costing as...Ch. 2.A - PROBLEM 2A-4 Activity-Based Absorption Costing as...Ch. 2.A - Prob. 5PCh. 2.A -
CASE 2A-6 Activity-Based Absorption Costing and...Ch. 2.B - EXERCISE 2B-1 Overhead Rate Based on Capacity...Ch. 2.B - EXERCISE 2B-2 Overhead Rates and Capacity Issues...Ch. 2.B - Prob. 3PCh. 2.B - Prob. 4C
Ch. 2 - Prob. 1QCh. 2 - What is absorption costing?Ch. 2 - What is normal costing?Ch. 2 - How is the unit product cost of a job calculated?
Ch. 2 - Explain the four-step process used to compute a...Ch. 2 - What is the purpose of the job cost sheet in a...Ch. 2 - Explain why some production costs must be assigned...Ch. 2 - Why do companies use predetermined overhead rates...Ch. 2 - What factors should be considered in selecting an...Ch. 2 - If a company fully allocates all of its overhead...Ch. 2 - Would you expect the amount of applied overhead...Ch. 2 - Prob. 12QCh. 2 - What is a plantwide overhead rate? Whyare multiple...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Prob. 3AECh. 2 - This Excel worksheet relates to the Dickson...Ch. 2 - Prob. 1F15Ch. 2 - Prob. 2F15Ch. 2 - Prob. 3F15Ch. 2 - Prob. 4F15Ch. 2 - Prob. 5F15Ch. 2 - Prob. 6F15Ch. 2 - Prob. 7F15Ch. 2 - Prob. 8F15Ch. 2 - Prob. 9F15Ch. 2 - Prob. 10F15Ch. 2 - Prob. 11F15Ch. 2 - Sweeten Company had no jobs in progress at the...Ch. 2 - Prob. 13F15Ch. 2 - Prob. 14F15Ch. 2 - Prob. 15F15Ch. 2 - EXERCISE 2-1 Compute a Predetermined Overhead Rate...Ch. 2 - Prob. 2ECh. 2 - EXERCISE 2–3 Computing Total Job Costs and Unit...Ch. 2 - EXERCISE 24 Computing Total Job Costs and Unit...Ch. 2 - EXERCISE 2-5 Computing Total Job Costs and Unit...Ch. 2 - Prob. 6ECh. 2 - EXERCISE 2-7 Job-Order Costing; Working Backwards...Ch. 2 - EXERCISE 2-8 Applying Overhead Cost; Computing...Ch. 2 - EXERCISE 2–9 Job-Order Costing and Decision Making...Ch. 2 - Prob. 10ECh. 2 - Prob. 11ECh. 2 - Prob. 12ECh. 2 - EXERCISE 2—13 Departmental Predetermined Overhead...Ch. 2 - EXERCISE 214 Job-Orders Costing for a Service...Ch. 2 - Prob. 15ECh. 2 - PROBLEM 2—16 Plantwide Predetermined Overhead...Ch. 2 - PROBLEM 217 Plantwide and Departmental...Ch. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - PROBLEM 2-21 Plant wide Versus Multiple...Ch. 2 - CASE 2-22 Plantwide versus Departmental Overhead...
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