Management Accounting and Finished Goods

3. On the basis of the responses to Question 1 and 2, what are the units of accounting in this arrangement?

2. At the end of a period, after overhead has been applied to all jobs, manufacturing overhead has a credit balance of $900. We say that overhead is:

(TCO 3) Adjusting Entries are required at the end of the period to ensure that accrual accounting principles are applied. At the beginning of the month $1,350 of office supplies were purchased. There was not a beginning balance and the one purchase was the only one for the month. At the end of the month $500 of supplies remained. Develop the adjusting entry. (1) Name the accounts impacted and how using the format account name/debit or credit/dollar amount (10 points) and (2) explain how the Accounting Equation is impacted. (10 points) (Points : 20)

Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

Overhead is charged to production at 70% of the direct materials cost. Jobs 475, 477, and 478 have been delivered to the customer.

Total estimated overhead costs are $305,300. Overhead cost allocated to the machining activity cost pool is $199,600, and $105,700 is allocated to the machine setup activity cost pool.

|6. |If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be: |

|(Same as 2005 as there is no change in selling price and Sales quantity) |  |  |

III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.

| (TCO 2) Bubba’s Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $2,250,000 and direct labor hours are budgeted at 415,000 hours. Actual overhead was $2,200,000 and actual direct labor hours worked were 422,000.

Pittman Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to market its products. These agents are paid a commission of 15% of selling price for all item sold.

The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 70.

Since there is no work in process at year-end, all amounts in the Work-in-Process account must be transferred to Finished-Goods Inventory. Thus:

B&B Fabricating uses a job order cost system. Overhead is applied to jobs on the basis of direct labour hours. During the current period, Job No. 105 was charged $400 in direct material, $450 in direct labour, and $180 in overheaD. If direct labor cost is an average of $15 per hour, the company's overhead application rate is:

In a weighted average method the equivalent units of production for a department are the number of units transferred to the next department of finished goods plus the equivalent units in the department’s ending work in process inventory.