Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 3, Problem 37E
Design Arts Associates is an interior decorating firm in Berlin. The following costs were incurred in the firm’s contract to redecorate the mayor’s offices.
The firm’s budget for the year included the following estimates:
Required: Calculate the total cost of the firm’s contract to redecorate the mayor’s offices. (Remember to express your answer in terms of euros.)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Design Arts Associates is an interior decorating firm in Berlin. The following costs were incurred in the firm’s contract to redecorate the mayor’s offices.
Direct material used
3,000
euros
Direct professional labor
6,000
euros
The firm’s budget for the year included the following estimates:
Budgeted overhead
400,000
euros
Budgeted direct professional labor
250,000
euros
Overhead is applied to contracts using a predetermined overhead rate calculated annually. The rate is based on direct professional labor cost. Required:Calculate the total cost of the firm’s contract to redecorate the mayor’s offices.
a.
Eye for detail is an interior decorating firm located in sydney. The following costs were incurred in the firms contract to redecorate the local council offices:
direct material $5,600
Professional labour 12 000
The firms budget for the year included the following estimates:
Budgeted overhed $800,000
Budgeted proffesional labour 500,000
1. Calculate the total cost of the firms contract to redcorate the council offices. Overhead is applied to contracts using a predetermined overhead rate, calculated annually, based on the professional labour cost. Materials are charged directly to each contract
2. Using the total cost to calculate a service fee, assuming that the company adds a 40 per cent profit margin to total cost.
b.
Refer to the information for a.
1.
Calculate the fee charged to redecorate the council offices assuming that the firm uses a chargeout rate of $360 per professional labour hour, which includes a profit margin of 40 per cent, and 120 hours are worked on the…
Rundle Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows.
Expected
Direct labor Home 1: $63,000 Home 2: $108,000, Home 3: $181,000
Direct materials Home 1: 98,000 Home 2: 143,000 Home 3: 186,000
Assume Rundle needs to allocate two major overhead costs ($ 52,800 of employee fringe benefits and $12,,810 of indirect materials cost) among the three Jobs.
required;
Choose an appropriate cost driver for each of the overhead costs and determine the cost of each house ( round " allocation rate to 2 decimal places.)
Chapter 3 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 3 - List and explain four purposes of product costing.Ch. 3 - Explain the difference between job-order and...Ch. 3 - How is the concept of product costing applied in...Ch. 3 - What are the purposes of the following documents:...Ch. 3 - Why is manufacturing overhead applied to products...Ch. 3 - Explain the benefits of using a predetermined...Ch. 3 - Describe one advantage and one disadvantage of...Ch. 3 - Describe an important cost-benefit issue involving...Ch. 3 - Explain the difference between actual and normal...Ch. 3 - When a single, volume-based cost driver (or...
Ch. 3 - Prob. 11RQCh. 3 - Describe the process of two-stage cost allocation...Ch. 3 - Define each of the following terms, and explain...Ch. 3 - Describe how job-order costing concepts are used...Ch. 3 - What is meant by the term cost driver? What is a...Ch. 3 - Describe the flow of costs through a...Ch. 3 - Give an example of how a hospital, such as the...Ch. 3 - Why are some manufacturing firms switching from...Ch. 3 - What is the cause of over applied or under applied...Ch. 3 - Briefly describe two ways of closing out over...Ch. 3 - Describe how a large retailer such as Lowes would...Ch. 3 - Prob. 22RQCh. 3 - For each of the following companies, indicate...Ch. 3 - The controller for Tender Bird Poultry, Inc....Ch. 3 - Finley Educational Products started and finished...Ch. 3 - Bodin Company manufactures finger splints for kids...Ch. 3 - McAllister, Inc. employs a normal costing system....Ch. 3 - Garrett Toy Company incurred the following costs...Ch. 3 - Crunchem Cereal Company incurred the following...Ch. 3 - Reimel Furniture Company, Inc. incurred the...Ch. 3 - Selected data concerning the past years operations...Ch. 3 - Sweet Tooth Confectionary incurred 157,000 of...Ch. 3 - The following information pertains to Trenton...Ch. 3 - The following data pertain to the Oneida...Ch. 3 - Refer to the data for the preceding exercise for...Ch. 3 - Design Arts Associates is an interior decorating...Ch. 3 - Suppose you are the controller for a company that...Ch. 3 - Laramie Leatherworks, which manufactures saddles...Ch. 3 - Refer to Exhibit 312, which portrays the three...Ch. 3 - Refer to the illustration of overhead application...Ch. 3 - The following data refer to Twisto Pretzel Company...Ch. 3 - Burlington Clock Works manufactures fine,...Ch. 3 - Perfecto Pizza Company produces microwavable...Ch. 3 - Stellar Sound, Inc. which uses a job-order costing...Ch. 3 - Finlon Upholstery, Inc. uses a job-order costing...Ch. 3 - JLR Enterprises provides consulting services...Ch. 3 - Garcia, Inc. uses a job-order costing system for...Ch. 3 - MarineCo, Inc. manufactures outboard motors and an...Ch. 3 - The following data refers to Huron Corporation for...Ch. 3 - Refer to the schedule of cost of goods...Ch. 3 - Marco Polo Map Companys cost of goods sold for...Ch. 3 - Midnight Sun Apparel Company uses normal costing,...Ch. 3 - Marc Jackson has recently been hired as a cost...Ch. 3 - Troy Electronics Company calculates its...Ch. 3 - Tiana Shar, the controller for Bondi Furniture...Ch. 3 - Scholastic Brass Corporation manufactures brass...Ch. 3 - Refer to the preceding problem regarding...Ch. 3 - Prob. 59PCh. 3 - TeleTech Corporation manufactures two different...Ch. 3 - CompuFurn, Inc. manufactures furniture for...Ch. 3 - FiberCom, Inc., a manufacturer of fiber optic...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Vince Melders, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated the following for the year: Number of direct labor hours 6,720 Direct labor cost $67,200 Overhead cost $50,400 During the year, the following actual amounts were experienced: Number of direct labor hours 6,045 Direct labor incurred $66,495 Overhead incurred $50,500 Vince Melders, owner of EcoScape, noticed that the watering systems for many houses in a local subdivision had the same layout and required virtually identical amounts of prime cost. Vince met with the subdivision builders and offered to install a basic watering system in each house. The idea was accepted enthusiastically, so Vince created a new company, Irrigation Specialties, to handle the subdivision business. In its first three months in business,…arrow_forwardA heavy construction firm has been awarded a contract to build a large concrete dam. It is expected that a total of 8 years will be required to complete the work. The firm will buy $600,000 worth of special equipment for the job. During the preparation of the job cost estimate, the following utilization schedule was computed for the special equipment:arrow_forwardOmicronie Inc., provides project management services in the construction industry for a variety of clients. Each job is uniquely different and the Lynn Deberghie, the company’s accountant decided to use job costing for the allocation of costs on the current jobs. She will be using construction-labour hours as the basis for overhead allocation. In December 2021, she estimated the following amounts for 2022: Direct Materials $15,650,000 Construction Labour $11,200,000 Overhead $9,800,000 Construction Labour-Hours 600,000 The following results for the first quarter of 2022 for the following jobs that were started and completed in that same period. Library Dental Office Medical Building Direct Materials $924,000 $1,134,600 $1,525,000 Construction Labour-Hours 76,400 47,200 19,500 Rounding all answers to 2 decimal places Calculate the predetermined overhead allocation rate for 2022 and apply overhead to the three (3)…arrow_forward
- Vince Melders, of EcoScape Company, designs and installs custom lawn and garden irrigation systems for homes and businesses throughout the state. Each job is different, requiring different materials and labor for installing the systems. EcoScape estimated the following for the year: Number of direct labor hours 6,720 Direct labor cost $67,200 Overhead cost $50,400 During the year, the following actual amounts were experienced: Number of direct labor hours 6,045 Direct labor incurred $66,495 Overhead incurred $50,500 Required: 1. Should EcoScape use process costing or job-order costing? 2. If EcoScape uses a normal costing system and overhead is applied on the basis of direct labor hours, What is the overhead rate? Round your answer to the nearest cent. $fill in the blank 2 per direct labor hour What is the average actual wage rate? $fill in the blank 3 per direct labor hour What is the cost of an installation that takes $3,500 of direct materials and 20 direct labor…arrow_forwardPark Industries manufactures custom-designed playground equipment for schools and city parks. Park expected to incur S784,700 of manufacturing overhead cost, 41,300 of direct labor hours, and S1,073,800 of direct labor cost during the year (the cost of direct labor is $26 per hour). The company allocates manufacturing overhead on the basis of direct labor nours. During August, Park completed Job 306. The job used 165 direct labor hours and required S12,700 of direct materials. The City of Jonestown has contracted to purchase the playground equipment at a price of 27% over manufacturing cost. Reac the requirements Requirement First identify the formulathen calculate the predetermined overhead rate. Estimated yearly overhead costs Estimated yearly direct labor hours - Predetermined overhead rate per hourarrow_forwardHicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)arrow_forward
- Crow Design is an interior design firm. The firm uses a job cost system in which each client is a different "job."Crow Design traces direct labor, licensing costs, and travel costs directly to each job (client). It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate computed as a percentage of direct labor costs. At the beginning of the current year, managing partner Brenna Gladstone prepared the following budget: Direct labor hours (professional). . . . . 8,000 hours Direct labor costs (professional). . . . . $1,600,000 Support staff salaries. . . . . . . . . . . . . . . $190,000 Computer lease payments. . . . . . . . . . . $41,000 Office supplies. . . . . . . . . . . . . . . . . . . . . $23,000 Office rent. . . . . . . . . . . . . . . . . . . . . . . . . $66,000 Later that same year in November, Crow Design served several clients. Records for two clients appear here: Fancy Food AllFood.com Direct labor hours. . . . . 680…arrow_forwardWhite Consulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. The firm uses a job cost system with a predetermined indirect cost allocation rate computed as a percentage of expected direct labor costs. At the beginning of the year, managing partner Kenna White prepared the following plan, or budget, for the year: Direct labor hours (professionals). . . . 16,000 hours Direct labor costs (professionals). . . . $2,350,000 Office rent. . . . . . . . . . . . . . . . . . . . . . $220,000 Support staff salaries. . . . . . . . . . . . . $940,000 Utilities. . . . . . . . . . . . . . . . . . . . . . . . $350,000 Tibbs Resources is inviting several consulting firms to bid for work. White estimates that this job will require about 200 direct labor hours. Requirements: 1. Compute WhiteConsulting's (a) hourly direct labor cost rate and (b) indirect cost allocation rate. 2. Compute the…arrow_forwardSimms Realtors, a real state consulting firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs. At the beginning of 2011, managing partner Debra Simms prepared the following budget for the year: Direct labor hours (professional) 14,000 hours Direct labor costs (professional) $2,150,000 Office rent 260,000 Support staff sallaries 850,000 Utilities 350,000 Maynard Manufacturing, Inc. is inviting several consultants to bid for work. Debra Simms estimated that this Job will require about 260 direct labor hours. Compute Simms' Relators' indirect cost allocation rate.arrow_forward
- 2. During the year, Job #123, a firm fixed-price Government contract for production of 3,000 raincoats, will be started and completed. Estimate contract cost using the rates determined in Question 1 and the following information. Use the Job Cost Summary table for your calculations. Note Department A's overhead rate was calculated by using direct labor hours as the base and Department B utilized machine hours. • Materials cost totaled $3,200 for Department A and $740 for Department B. Direct labor hours totaled 240 for Department A and 80 for Department B. Machine hours totaled 120 for Department A and 300 for Department B. Proposed / Negotiated Cost Summary for Job #123 Cost Element Department A Department B Total 3200 254 2208 7952 3970 Direct Material 740 88 3610 Direct Labor Factory Overhead 13170 Total Costarrow_forwardJeff Boyer, of Rainking Company, designs and installs austom lawn and garden irrigation systems for homes and businesses throughour the state. Each job is different, requiring diffierene materials and labor for installing the systems. Rainking estimared the following for the year: Number of installations 250 5,000 క,000 S75,000 S65,000 Number of direct labor hours Direct materials cost Direcr labor cost Overhead cost During the year, the following actual amounts were experienced: Number of installacions 245 5,040 S59.350 $75,600 S64,150 Number of direct labor hours Direct materials used Direct labor incurred Overhead incurred Required: 1. Should Rainking use process costing or job-order costing Explain. 2. IF Rainking uses a normal costing system and overhead is applied on the basis of direct labor hours, what is the cost of an installation that takes $3,500 of direct materials and 50 direct labor hours? 3. Explain why Rainking would have difficulty using an actual costing system.arrow_forwardRegis Place is a health-care facility that has been allocating its overhead costs to patients based on number of patient days. The facility’s overhead costs total $2,172,240 per year and the facility (which operates monthly at capacity) has a total of 60 beds available. (Assume a 360-day year.) The facility’s accountant is considering a new overhead allocation method using the following information: Rooms are cleaned daily; laundry for rooms is done, on average, every other day. d. Assume a patient stayed at Regis Place for six days. The patient was in a single room and required six hours of nursing care and 30 hours of physical therapy. 1. What overhead cost would be assigned to this patient under the current method of overhead allocation? $______ 2. What overhead cost would be assigned to this patient under the ABC method of overhead allocation? Rooms $ Laundry $ Nursing care $ Physical therapy $ General services $ Total $arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Inspection and Quality control in Manufacturing. What is quality inspection?; Author: Educationleaves;https://www.youtube.com/watch?v=Ey4MqC7Kp7g;License: Standard youtube license