. Calculate the cost of Job 845 using ABC to assign the overhead costs. Job 845 Direct materials cost Answer Direct labor cost Answer Manufacturing overhead costs: Setup costs Answer Production scheduling Answer Production engineering Answer Supervision Answer Machine operations Answer Total cost Answer c. Calculate the cost of Job 845 using a company-wide overhead rate based on machine hours. First, compute company-wide overhead rate using machine hours (Note: Information needed for this computation can be found in the table below in part d.) Round rate to two decimal places. $Answer per machine hour Next, use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Job 845 Direct materials cost Answer Direct labor cost Answer Manufacturing overhead cost: Answer Total cost Answer
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs:
| Setup (1,000 setup hours) | $152,000 |
| Production scheduling (400 batches) | 68,000 |
| Production engineering (60 change orders) | 120,000 |
| Supervision (2,000 direct labor hours) | 56,000 |
| Machine maintenance (12,000 machine hours) | 84,000 |
| Total activity costs | $480,000 |
The following additional data were provided for Job 845
| Direct materials costs | $9,000 |
| Direct labor cost (5 Milling direct labor hours; | |
| 35 Finishing direct labor hours) | $3,000 |
| Setup hours | 5 hours |
| Production scheduling | 1 batch |
| Machine hours used (25 Milling machine hours; | |
| 5 Finishing machine hours) | 30 hours |
| Production engineering | 3 change orders |
a. Calculate the cost per unit of activity driver for each activity cost category.
| Setup |
Answer |
| Production scheduling cost |
Answer |
| Production engineering cost |
Answer |
| Supervision cost | Answer |
| Machine operating cost |
Answer |
b. Calculate the cost of Job 845 using ABC to assign the overhead costs.
| Job 845 | ||
|---|---|---|
| Direct materials cost | Answer | |
| Direct labor cost | Answer | |
| Manufacturing overhead costs: | ||
| Setup costs | Answer | |
| Production scheduling | Answer | |
| Production engineering | Answer | |
| Supervision | Answer | |
| Machine operations | Answer | |
| Total cost | Answer |
c. Calculate the cost of Job 845 using a company-wide overhead rate based on machine hours.
First, compute company-wide overhead rate using machine hours (Note: Information needed for this computation can be found in the table below in part d.)
Round rate to two decimal places.
$Answer per machine hour
Next, use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
| Job 845 | |
|---|---|
| Direct materials cost | Answer |
| Direct labor cost | Answer |
| Manufacturing overhead cost: | Answer |
| Total cost | Answer |
d. Calculate the cost of Job 845 using a machine hour departmental overhead rate for the Milling Department and a direct labor hour overhead rate for the Finishing Department.
| Milling Department manufacturing overhead | $352,000 |
| Finishing Department manufacturing overhead | $128,000 |
| Machine hours used | |
| Milling Department | 10,000 hours |
| Finishing Department | 2,000 hours |
| Labor hours used | |
| Milling Department | 1,000 hours |
| Finishing Department | 1,000 hours |
Round rates to two decimal places, if needed.
$Answer per Milling Dept. machine hour
$Answer per Finishing Dept. direct labor hour
Use rounded overhead rates calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
| Job 845 | |
|---|---|
| Direct materials cost | Answer |
| Direct labor cost | Answer |
| Manufacturing overhead costs: | |
| Milling Department | Answer |
| Finishing Department | Answer |
| Total cost | Answer |
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