Managerial Accounting
15th Edition
ISBN: 9780078025631
Author: Ray H Garrison, Eric Noreen, Peter C. Brewer Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 29C
CASE 2-22 Plantwide versus Departmental Overhead Rates; Pricing LO2-1, LO2-2, LO2-3, LO2-4
'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 job-order costing system The company uses a plantwide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all feed) to jobs, The following estimates were made at the beginning of the year.
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 7
Quiet Corp. currently makes 2000 subcomponents a year in one of its factories. The unit costs to produce are:
Description
Per unit
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
$4
4
2
IMI
An outside supplier has offered to provide Quiet Corp. with the 2000 subcomponents at a $17 per unit price. Fixed overhead is not avoidable. If Quiet Corp. decides to
buy from the outside supplier, the impact to net income will be ?
If positive, enter the number, if negative, place a-sign before your number
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 3 Solutions
Managerial Accounting
Ch. 3.A - Prob. 1ECh. 3.A - Prob. 2ECh. 3.A - Prob. 3ECh. 3.A - PROBLEM 3A-4 Activity-Based Absorption Costing as...Ch. 3.A - Prob. 5PCh. 3.A - CASE 3A-6 Activity-Based Absorption Costing and...Ch. 3.B - Prob. 1ECh. 3.B - Prob. 2ECh. 3.B - Prob. 3PCh. 3.B - Prob. 4C
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Prob. 8QCh. 3 - 3-9 What is underapplied overhead? Overapplied...Ch. 3 - Prob. 10QCh. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - Prob. 3AECh. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - Prob. 1F15Ch. 3 - Prob. 2F15Ch. 3 - Prob. 3F15Ch. 3 - Prob. 4F15Ch. 3 - Prob. 5F15Ch. 3 - Prob. 6F15Ch. 3 - Prob. 7F15Ch. 3 - Prob. 8F15Ch. 3 - Prob. 9F15Ch. 3 - Prob. 10F15Ch. 3 - Prob. 11F15Ch. 3 - Prob. 12F15Ch. 3 - Prob. 13F15Ch. 3 - Prob. 14F15Ch. 3 - Prob. 15F15Ch. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - EXERCISE 24 Computing Total Job Costs and Unit...Ch. 3 - EXERCISE 2-5 Computing Total Job Costs and Unit...Ch. 3 - Prob. 6ECh. 3 - EXERCISE 2-7 Job-Order Costing; Working Backwards...Ch. 3 - Prob. 8ECh. 3 - EXERCISE 3-9 Journal Entries and T-accounts...Ch. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 16ECh. 3 - Prob. 17ECh. 3 - Prob. 18ECh. 3 - Prob. 19ECh. 3 - EXERCISE 2—13 Departmental Predetermined Overhead...Ch. 3 - EXERCISE 214 Job-Orders Costing for a Service...Ch. 3 - Prob. 22PCh. 3 - PROBLEM 2—16 Plantwide Predetermined Overhead...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - PROBLEM 2-21 Plant wide Versus Multiple...Ch. 3 - CASE 2-22 Plantwide versus Departmental Overhead...Ch. 3 - Prob. 30C
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