MANAGERIAL ACCOUNTING FOR MANAGERS
6th Edition
ISBN: 9781265365615
Author: Noreen
Publisher: MCG
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Kunkel Company makes two products and uses a conventional costing system in which a single plantwide
predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the
upcoming year follow:
Mercon
$ 10.00
Direct materials cost per unit
Direct labor cost per unit
Direct labor-hours per unit
Number of units produced
$ 3.00
0.20
10,000
These products are customized to some degree for specific customers.
Wurcon
$ 8.00
$ 3.75
0.25
40,000
Required:
1. The company's manufacturing overhead costs for the year are expected to be $336,000. Using the company's
conventional costing system, compute the unit product costs for the two products.
2. Management is considering an activity-based costing system in which half of the overhead would continue to
be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design
time. This time is expected to be distributed as follows during the upcoming year:
1.…
Q-1: The Hum co. has decided to distribute the costs of service departments by the algebraic method. The
producing department A and B the service departments X and Y and the monthly data are:
Actual factory overhead
Cost before distribution
Rs
Service provided by
Y
50%
84,000
58,000
20,000
17,600
A
40%
50
30
20
Y.
10
Required:
Total factory overhead of producing department after distribution of service department cost.
Department A predetermined overhead rate is based on direct labor hours. The total rate is Rs3, 40% of which
fixed. Fixed overhead budgeted is Rs 46,000. The Actual direct labor hours for the month were 34,000.
Compute spending and idle capacity variances for department A.
es
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
Machine-hours required to support estimated production
Fixed manufacturing overhead cost
Variable manufacturing overhead cost per direct labor-hour
Variable manufacturing overhead cost per machine-hour
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials
Direct labor cost
Direct labor-hours
Machine-hours
$187
$ 370
15
110,000
55,000
$ 308,000
5
$ 3.20
$ 6.40
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 manufacturing cost of Job 550.
c. If Landen…
Chapter 3 Solutions
MANAGERIAL ACCOUNTING FOR MANAGERS
Ch. 3 - Prob. 3.1QCh. 3 - Prob. 3.2QCh. 3 - Prob. 3.3QCh. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Prob. 3.6QCh. 3 - Prob. 3.7QCh. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Prob. 3.10Q
Ch. 3 - Prob. 3.11QCh. 3 - Prob. 3.12QCh. 3 - Prob. 3.13QCh. 3 - Prob. 1AECh. 3 - Prob. 1TF15Ch. 3 - Prob. 3.1ECh. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Prob. 3.6ECh. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Prob. 3.10ECh. 3 - Prob. 3.11ECh. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Prob. 3.15ECh. 3 - Prob. 3.16PCh. 3 - Prob. 3.17PCh. 3 - Prob. 3.18PCh. 3 - Prob. 3.19PCh. 3 - Prob. 3.20PCh. 3 - Prob. 3.21PCh. 3 - Prob. 3.22PCh. 3 - Prob. 3.23PCh. 3 - Plantwide versus Multiple Predetermined Overhead...Ch. 3 - Prob. 3.25PCh. 3 - Prob. 3.26C
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- 20 Pope Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs for the next two quarters are given below: First Qtr 288,000 160,000 Second Qtr $ 140,000 80,000 220,000 Direct materials Direct labor Manufacturing overhead Total manufacturing costs 240,000 $ 688,000 $ 440,000 Number of units to be produced Estimated unit product cost 160,000 80,000 $ 4.30 2$ 5.50 Based on the information given, estimate the fixed manufacturing overhead cost per quarter. A. $ В. $ С. $ D. $ E. None of the above 648,000 192,000 200,000 220,000arrow_forwardProblem 2-18 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3] Landen Corporation uses job-order costing. At the beginning of the year, it made the following estimates: Direct labor-hours required to support estimated production Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour During the year, Job 550 was started and completed. The following information pertains to this job: Direct materials Direct labor cost Direct labor-hours. Machine-hours $ 195 $288 150,000 75,000 $ 420,000 15 5 $ 4.60 $ 9.20 Required: 1. Assume 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 manufacturing cost of Job 550. c. If Landen uses a markup percentage of 200% of its…arrow_forwardWhich of the following would be an acceptable measure of activity for a material handling activity cost pool? Multiple Choice о No Number of material moves Yes Multiple Choice No Yes $28.21 per machine-hour $31.75 per machine-hour Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 46,000 machine-hours. The estimated variable manufacturing overhead was $4.54 per machine-hour and the estimated total fixed manufacturing overhead was $1,297,660. The predetermined overhead rate for the recently completed year was closest to: $4.54 per machine-hour Yes $32.75 per machine-hour Weight of material moved Yes No Noarrow_forward
- Pedregon Corporation has provided the following information: Variable manufacturing overhead Fixed manufacturing overhead O $5.70 $8.15 Sales commissions Varlable administrative expense Fixed selling and administrative expense $5,000 If the selling price is $21.60 per unit, the contribution margin per unit sold is closest to: O $3.90 Direct materials Direct labor O $10.70 * Previous Cost per Unit Cost per Period $7.10 $ 3.80 $1.35 $14,000 $0.55 $0.65arrow_forward< Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Expected Cost Activity Driver Activity Capacity Number of setups Number of orders Activity Setting up equipment Ordering costs Machine costs Receiving Receiving hours Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Direct materials Direct labor Units completed Direct labor hours Number of setups Number of orders Machine hours Receiving hours $464,550 Required: 336,300 747,000 424,200 Model A Machine hours $604,000 498,000 17,000 5,800 410 Model B $804,000 456,000 8,700 1,500 6,200 23,500 3,800 The company's normal activity is 7,300 direct labor hours. 160 11,500 18,000 6,300 570 17,700 41,500 10,100 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent.arrow_forwardAssume a company manufactures many products, one of which normally sells for $48 per unit. The company's accounting system reports the following unit product cost for this product: Direct materials. Direct labor Manufacturing overhead Total cost Per Unit The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range. Multiple Choice $18 12 10 $ 40 A customer has approached the company with an offer to buy 300 units of a customized version of the product mentioned above for $42. The company can fulfill this order using existing manufacturing capacity. To accommodate the customer's desired product design, the company would incur additional direct materials cost per unit of $3. It would also have to buy a special tool for $520 that has no other use or resale value after the special order is completed. Assuming that accepting this…arrow_forward
- Current Attempt in Progress In Robert's manufacturing plant, the estimated monthly overhead cost function is provided in the Y = m(X) + b format: Total monthly overhead costs = $1.15(number of machine hours) + $6,500. Given this cost function, specify (a) the variable cost, (b) the fixed cost, (c) the cost driver, and (d) whether these monthly overhead costs are considered variable, fixed, or mixed in total. (Round variable cost to 2 decimal places, e.g. 15.25.) Variable cost Fixed cost Cost driver Cost type $ $arrow_forwardQuestion No.6 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers. Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000 Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system. Allocate the overhead cost to Product XX and YY using the functional-based costing system overhead rate calculated in part C.arrow_forwardAllocating Service Department Costs: Allocation Basis Alternatives Weld-Rite Fabricators has two producing departments, P1 and P2, and one service department, S1. Estimated directed overhead costs per month are as follows: P1 $450,000 P2 750,000 $1 273,000 Other data follow: Numbers of employees Production capacity (units) Space occupied (square feet) Five-year average of $1's service output used P1 P2 150 50 100,000 60,000 5,000 15,000 65% 35% For each of the following allocation bases, determine the total estimated overhead cost for P1 and P2 after allocating 51 cost to the producing departments. 1. Based on number of employees $ P1 P2 $ 2. Production capacity in units 3. Space occupied 4. Five-year average of $1 service used 627,450✔ 845,550✔ 5. Estimated direct overhead costsarrow_forward
- Question 4.1 For its overhead costs, the wholesale distributor Janz Company uses activity-based costing. In terms of the company's annual overhead costs and its activity-based costing system the following data has been provided: Overhead Costs: Wages and salaries $380,000 Non-wage expenses 90,000 Total $470,000 Distribution of Resource Consumption: Activity Cost Pools Filling Orders Product Support Other Total Wages and salaries 20% 65% 15% 100% Non-wage expenses 25% 15% 60% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. Shown below is the amount of activity for the year: Activity Cost Pool Filling orders Product support Annual Activity 3,100 orders 32 products Not applicable Other Instructions: Compute the activity rates for the Filling Orders and Product Support activity cost pools.arrow_forwardA company has the following overhead costs and activities: Estimated Expected Activity Product V Product W Product X Overhead Activities and Activity Measures Machine setups (setups) Processing customer orders (orders) Assembling products (assembly-hours) $9,178.00 Cost S7,234.50 $3,565.50 69 12 10 20 21 492 697 111 4. A company sells two products, one with sales of $10,000 and variable expenses of $2,500, another with sales of $46,000 and variable expenses of $15,420. Fixed expenses are $33,100. Breakeven point for the whole company is close to: А. 833,100 В. $22,900 C. $51,020 D. $48,676 A company that reduces the proportion of variable costs in its cost structure will: A. enjoys higher stability in profits. B. increase its profits more when the economy is good. C. have a loss more easily when the economy is bad. D. be indifferent. 5. 6. is normally recorded on any financial statement but irrelevant in decision making which is not. A. Sunk cost B. Incremental cost C. Differential…arrow_forwardAssume a company manufactures many products, one of which normally sells for $48 per unit. The company's accounting system reports the following unit product cost for this product Per Unit Direct materials $ 18 Direct labor 12 Manufacturing overhead 10 Total cost $ 40 The company estimates that $3 of Its manufacturing overhead varles with respect to the number of units produced. The remainder of its overhead Is fixed and unaffected by the volume of units produced within the relevant range A customer has approached the company with an offer to buy 300 units of a customized verslon of the product mentioned above for $39. The company can fulfill this order using existing manufacturing capacity. To accommodate the customer's desired product design, the company would Incur additional direct materlals cost per unit of $3. It would also have to buy a speclal tool for $600 that has no other use or resale value after the special order Is completed. Assuming that accepting this order will not…arrow_forward
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