Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter 4, Problem 4.1BE
a)
To determine
Compute the predetermined
b)
To determine
Determine the amount of overhead applied for the year.
c)
To determine
Explain the difference between activity-based costing, and the terms of computing a predetermined overhead rate.
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Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year.
Budgeted
Actual
Overhead cost
$1,513,600
$1,486,600
Machine hours
56,600
47,700
Direct labor hours
110,000
104,000
Overhead is applied on the basis of direct labor hours.
Compute the predetermined overhead rate. (Round answer to 2 decimal places, e.g. 12.25.)
Predetermined overhead rate
per direct labor hour
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INTERACTIVE TUTORIAL
Determine the amount of overhead applied for the year.
Amount of overhead applied
Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year.
Budgeted
Actual
Overhead cost
$1,522,610
$1,494,610
Machine hours
58,000
49,600
Direct labor hours
107,000
102,500
Overhead is applied on the basis of direct labor hours.
(a)
Compute the predetermined overhead rate. (Round answer to 2 decimal places, e.g. 12.25.)
Predetermined overhead rate
per direct labor hour
Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year. BudgetedActual Overhead cost$1,333, 2005 1, 307, 200Machine hours56, 30049, 000Direct labor hours101, 00097, 800Overhead is applied on the basis of direct labor hours. (a) Compute the predetermined overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) Predetermined overhead rateSper direct labor hour
Chapter 4 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 4 - Under what conditions is direct labor a valid...Ch. 4 - What has happened in recent industrial history to...Ch. 4 - In an automated manufacturing environment, what...Ch. 4 - What is generally true about overhead allocation...Ch. 4 - What are the principal differences between...Ch. 4 - What is the formula for computing activity-based...Ch. 4 - What steps are involved in developing an activity-...Ch. 4 - Prob. 8QCh. 4 - What is an activity cost pool?Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - What is the formula for assigning activity cost...Ch. 4 - What are the benefits of activity-based costing?Ch. 4 - What are the limitations of activity-based...Ch. 4 - Under what conditions is ABC generally the...Ch. 4 - Prob. 16QCh. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 4.1BECh. 4 - Finney Inc. has conducted an analysis of overhead...Ch. 4 - Splash Co. identifies the following activities...Ch. 4 - Mason Company manufactures four products in a...Ch. 4 - Morgana Company identifies three activities in its...Ch. 4 - Weisman, Inc. uses activity-based costing as the...Ch. 4 - Spud, Inc. a manufacturer of gourmet potato chips,...Ch. 4 - Prob. 4.8BECh. 4 - Pine and Danner is an architectural firm that is...Ch. 4 - Prob. 4.10BECh. 4 - Fixlt, Inc. operates 20 injection molding machines...Ch. 4 - Prob. 4.12BECh. 4 - Indicate whether the following statements are true...Ch. 4 - Compute activity-based overhead rates and assign...Ch. 4 - Adamson Company manufactures four lines of garden...Ch. 4 - Ready Ride is a trucking company. It provides...Ch. 4 - Saddle Inc. has two types of handbags: standard...Ch. 4 - Ayala Inc. has conducted the following analysis...Ch. 4 - EcoFabrics has budgeted overhead costs of 945,000....Ch. 4 - Altex Inc. manufactures two products: car wheels...Ch. 4 - Perdon Corporation manufactures safeslarge mobile...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - Rojas Vineyards in Oakville, California, produces...Ch. 4 - Wilmington, Inc. manufactures five models of...Ch. 4 - Air United, Inc. manufactures two products:...Ch. 4 - Kragan Clothing Company manufactures its own...Ch. 4 - Health 'R Us, Inc., uses a traditional product...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - William Mendel Sons, Inc. is a small...Ch. 4 - Venus Creations sells window treatments (shades,...Ch. 4 - Snap Prints Company is a small printing and...Ch. 4 - Lasso and Markowitz is a law firm that is...Ch. 4 - Manzeck Company operates a snow-removal service....Ch. 4 - Combat Fire, Inc. manufactures steel cylinders and...Ch. 4 - Prob. 4.2APCh. 4 - Shaker Stairs Co. designs and builds factory-made...Ch. 4 - Prob. 4.4APCh. 4 - Lewis and Stark is a public accounting firm that...Ch. 4 - CURRENT DESIGNS As you teamed in the previous...Ch. 4 - Prob. 4.1BYPCh. 4 - Prob. 4.2BYPCh. 4 - Curtis Rich, the cost accountant for Hi-Power...Ch. 4 - As discussed in the chapter, the principles...
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- The Brass Works is in the process of determining manufacturing overhead. Journalize the entries to record the following events to Factory Overhead, Administrative Expenses, and Selling Expenses, or allocated between the three as appropriate. All items were paid in cash at the time of acquisition. Next compute the overhead application rate and journalize the entry to apply overhead to Work in Process. a. Brass Works purchases an insurance policy for $4,000. It is computed that 80% of the value of the policy protects production, and the balance protects the administrative offices. Brass Works charges insurance initially to expense. If an amount box does not require an entry, leave it blank. fill in the blank abd86b04df9ffeb_2 fill in the blank abd86b04df9ffeb_3 fill in the blank abd86b04df9ffeb_5 fill in the blank abd86b04df9ffeb_6 fill in the blank abd86b04df9ffeb_8 fill in the blank abd86b04df9ffeb_9 b. The electric bill shows an amount due of…arrow_forwardAt the end of the year, the Comptroller accumulated the total actual costs and hours incurred by Department A and Department B during the year for the company. Using the information provided below, calculate the final overhead rates for both departments. Plant Total Department B Department A $25,000 $362,000 $337,000 Direct Material Cost $99,000 $459,400 $360,400 Direct Labor Cost $495,000 $794,000 $299,000 Department Overhead Cost 43,000 9,000 34,000 Direct Labor Hours 42,000 41,000 1,000 Machine Hours per direct labor hour Department A: Department B per machine hourarrow_forwardTravis Inc. employed several maintenance engineers to keep the equipment running in peak condition. Over the past eight months, Travis incurred the following maintenance cost for these engineers. Plant activity is best measured by direct labor hours. Month Direct Labor Hours Maintenance Cost January 1,700 $14,300 February 1,900 $15,200 March 1,800 $16,700 April 1,600 $14,000 May 1,500 $14,300 June 1,300 $13,000 July 1,100 $12,800 August 1,400 $14,200 Required: Using the high-low method, determine the fixed and variable components of the maintenance costs.arrow_forward
- Hillcrest Publishing Co. established the following cost pools for 2018 support costs: Cost Pool Machine setup Amount $25,000 $22,000 $18,000 $16,000 Cost Driver Setup hours Number of inspections Number 900 Inspection Maintenance 400 Machine hours 9,800 Materials handling Number of moves 200 The following data pertains to two jobs performed during 2018: Job #60 1,450 $11,510 $8,220 Job #70 1,060 $8,890 $6,780 610 Item Number of units Direct materials cost Direct labor cost Machine hours 750 Direct labor hours 595 475 Number of material moves Number of setup hours Number of inspections 44 17 72 39 36 21 (1) Determine the unit cost of Job #60 using machine hrs. to allocate all support costs: $arrow_forwardLocke Data Processing reported expenses of $20.50 million for indirect labor, of which $10.10 million was for data analysis and $10.40 million was for data entry. Locke recorded 100,000 hours of data analysis and 400,000 hours of data entry. What are the activity-based rates for each area of direct labor? Direct Labor Data analysis Data entry Activity-Based Rate per hour per hourarrow_forwardHillcrest Publishing Co. established the following cost pools for 2018 support costs: Cost Pool Machine setup Amount $25,000 $22,000 $18,000 $16,000 Cost Driver Setup hours Number of inspections Number 900 Inspection Maintenance 400 Machine hours 9,800 200 Materials handling Number of moves The following data pertains to two jobs performed during 2018: Job #60 1,450 $11,510 $8,220 Job #70 1,060 $8,890 $6,780 Item Number of units Direct materials cost Direct labor cost Machine hours 750 610 Direct labor hours 595 475 Number of material moves 44 17 Number of setup hours Number of inspections 72 39 36 21 Determine the unit cost of Job #70 using activity based costing: $arrow_forward
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