Managerial Accounting 8ed Chapter3

1230 WordsApr 6, 20115 Pages
CHAPTER 3 PROBLEM 3-43 (35 MINUTES) 1. Predetermined overhead rate = budgeted overhead ÷ budgeted direct-labor cost = $2,730,000 ÷ $2,100,000 = 130% of direct labor cost 2. Additions (debits) total $7,802,500 [$2,800,000 + $2,175,000 + ($2,175,000 x 130%)]. 3. The finished-goods inventory consisted of job no. 3154, which cost $175,750 [$78,000 + $42,500 + ($42,500 x 130%)]. 4. 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: Finished-Goods Inventory 7,880,900* Work-in-Process Inventory 7,880,900 *Beginning balance in Work-in-Process Inventory + additions to the account: $78,400 + $7,802,500 = $7,880,900 5.…show more content…
2. Predetermined overhead rate = budgeted overhead ÷ traceable costs = $1,050,000 ÷ $3,750,000 = 28% of traceable costs 3. Target profit percentage = target profit ÷ total cost = $960,000 ÷ $4,800,000 = 20% of cost 4. The total cost of the Davis Manufacturing project is $96,000, and the billing is $115,200, as follows: Professional staff salaries… ……… $61,500 Administrative support staff……… 3,900 Photocopying………………………… 750 Travel………………………………….. 6,750 Other operating costs………………. 2,100 Subtotal…………………………… $75,000 Overhead ($75,000 x 28%)…………. 21,000 Total cost…………………………. $96,000 Markup ($96,000 x 20%)……………. 19,200 Billing to Davis……………………… $115,200 5. Possible nontraceable costs include utilities, rent, depreciation, advertising, top management salaries, and insurance. 6. Professional staff members are compensated for attending training sessions and firm-wide planning meetings, paid vacations, and completion of general, non-client-related paperwork and reports. These activities benefit multiple clients, the consultant, and/or the overall firm, making traceability to specific clients difficult if not impossible. PROBLEM 3-49 (45 MINUTES) 1. SUPERIOR METALS SCHEDULE OF COST OF GOODS MANUFACTURED FOR THE YEAR ENDED DECEMBER 31, 20X4 Direct material: Raw

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