Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Textbook Question
Chapter 2, Problem 22C
CASE 2-22 Plantwide versus Departmental
'Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $2000. It seems we’re either too half to pet the job or too low to make any money on half the jobs we bid.”
Teledex Company manufactures products to customers' specifications and uses a
Department
FabricatingMachiningAssemblyTotal Plant
Manufacturing overhead....$350,000$400,000$90,000$840,000
Direct labor.......$200,000$100,000$300,000$600,000
Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required
Department
| Fabricating | Machining | Assembly | Total Plant | |
| Direct materials | $3,000 |
$200 | $1,400 | $4,600 |
| Direct labor | $2,800 | $500 | $6,200 | $9,500 |
| Manufacturing overhead ... | ? |
? | ? | ? |
Required:
- Using the company's plantwide approach:
a. Compute the predetermined overhead rate for each department for the current year.
b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.
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Question 2
Black and White (B&W) is a building business that provides a range of building
services to the public. Recently they have been asked to quote for garage
conversions (GC) and extensions to properties (EX) and have found that they
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jobs at budgeted total cost plus 52%. Overheads are currently absorbed on a
labour hour basis. B&W thinks that a switch to activity based costing (ABC) to
absorb overheads would reduce the cost associated to GC and hence make
them more competitive.
Overheads of
Activity
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planning document to be raised. The typical EX costs RO 16,000…
C6.43 Job costing; department overhead cost allocation: tour operator LO 6.72
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Page 285
profitable and which are not. The three packages are to Thailand, Malaysia and Indonesia. The sales and direct costs of each corporate package for last
year are as follows:
Bali Adventure
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Problem 5 (Linear Cost Approximation)
Tita Lopez, managing director of the ABS Consulting Group, is examining
how overhead costs behave with variations in monthly professional labor-
hours billed to clients. Assume the following historical data:
Professional Labor-Hours
Billed to Clients
Total
Overhead Costs
P340,000
400.000
435,000
477,000
529.000
587.000
3,000
4,000
5,000
6.000
7,000
8.000
Required:
1. Compute the linear cost function, relating total overhead cost to
professional labor-hours, using the representative observations of 4,000
and 7,000 hours.
component of the cost function represent the fixed overhead costs of the
ABS Consulting Group? Why?
Plot the linear cost function. Does the constant
What wouid be the predicted total overhead costs for (a) 5,000 hours, and
(b) 8.000 hours using the cost function estimated in requirement 1? Plot
the predicted costs and actual costs for 5,000 and 8,000 hours.
3. Lopez had a chance to accept a special job that would have boosted…
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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