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
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Textbook Question
Chapter 3, Problem 43P
Burlington Clock Works manufactures fine, handcrafted clocks. The firm uses a
- a. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.
- b. Twenty brass counterweights were requisitioned for production. Each weight cost $23.
- c. Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material.
- d. Depreciation on the clockworks building for October was $8,000.
- e. A $400 utility bill was paid in cash.
- f. Time cards showed the following usage of labor:
Job number G60: 12 grandfather clocks, 1,000 hours of direct labor
Job number C81: 20 cuckoo clocks, 700 hours of direct labor
The master clockmakers (direct-labor personnel) earn $20 per hour.
- g. The October property tax bill for $910 was received but has not yet been paid in cash.
- h. The firm employs laborers who perform various tasks such as material handling and shop cleanup. Their wages for October amounted to $2,500.
- i. Job number G60, which was started in July, was finished in October. The total cost of the job was $14,400.
- j. Nine of the grandfather clocks from job number G60 were sold in October for $1,500 each.
Required:
- 1. Calculate the firm’s predetermined overhead rate for the year.
- 2. Prepare
journal entries to record the events described above.
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Salinger Company estimates that total factory overhead costs will be $78,000 for the year. Direct labor hours are estimated to be 13,000.
a. For Salinger Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. If required, round your answer to two decimal places
b. During August, Salinger Company accumulated 850 hours of direct labor costs on Job 40 and 530 hours on Job 42. Determine the amount of factory overhead applied to Jobs 40 and 42 in August.
c. Prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.
Carrothers Company estimates that total factory
overhead costs will be $90,000 for the year. Direct
labor hours are estimated to be 18,000.
a. For Carrothers Company, determine the
predetermined factory overhead rate using direct
labor hours as the activity base.
per direct labor hour
b. During August, Carrothers Company
accumulated 740 hours of direct labor costs on Job
50 and 870 hours on Job 56. Determine the
amount of factory overhead applied to Jobs 50 and
56 in August.
c. Journalize the entry to apply factory overhead
to both jobs in August according to the
predetermined overhead rate. If an amount box
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88
"Burlington Clock Works manufacture fines, handcrafts clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year, which represents each employee’s practical capacity. The following events occurred during October.
The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.
Twenty brass counterweights were requisitioned for production. Each weight cost $23.
Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material.
Depreciation on the clockworks building for October was $8,000.
A $400 utility bill was paid in cash.
Timecards showed the following usage of labor:
Job number G60: 12 grandfather clocks, 1,000 hours of direct labor
Job…
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...
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