22. The controller for Mitchell Supply Company has established the following overhead cospools and cost drivers:BudgetedOverhead Cost$150,00052,50037,50090.000$330.000Cost DriverNumber of setupsOverhead Cost PoolMachine setupSMaterial handlingQuality control inspectionOther overhead costsTotalUnits of raw materia!Number of inspectionsMachine hoursOverhead Cost PoolMachine setupsMaterial handlingQuality controlOther overheadBudgeled Levelfor Cost Driver100 setups50,000 units1,000 inspections15,000 machine hoursOverhead Rate$1,500 per seng$1.05 per unit$37.50 per inspectionS6 per machine hourOrder no. 610 has the following production requirements:Maehine setupsRaw materialinspectionsMachine hours5 setups10,000 units12 inspections600 machine hoursRequiredA Compute the total everhend that should be assinned teorder no 610 y usingactivity based cOsting.11 Suppose that Michel ware to use & sing etorerhead ale based onmachine hous. Compute thhe tate or ho ea edcadassincd to order neC Diseuss the merits ul an acivin lascuFostng teancomparsan withauaduonalPOsTung system.

Name: 22. The controller for Mitchell Supply Company has established the fo
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Description: 22. The controller for Mitchell Supply Company has established the following overhead cospools and cost drivers:BudgetedOverhead Cost$150,00052,50037,50090.000$330.000Cost DriverNumber of setupsOverhead Cost PoolMachine setupSMaterial handlingQualit

The predetermined overhead rate is calculated as estimated overhead cost divided by base activity.

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22. The controller for Mitchell Supply Company has established the following overhead pools and cost drivers: Overhead Cost Pool Machine setups Material handling Quality control inspection Other overhead costs Total Budgeted Overhead Cost $150,000 52,500 37,500 90.000 $330.000 Cost Driver Number of setups Units of raw materia! Number of inspection Machine hours Overhead Cost Pool Machine setups Material handling Quality control Other overhead Budgeted Level for Cost Driver 100 setups 50,000 units 1,000 inspections 15,000 machine hours Overhead Ratc $1,500 per seun $1.05 per unit $37.50 per inspectio S6 per machine hour Order no. 610 has the following production requirements: Machine setups Raw material Inspections Machine hours 5 setups 10,000 units 12 inspections 600 machine hours

22. The controller for Mitchell Supply Company has established the following overhead pools and cost drivers: Overhead Cost Pool Machine setups Material handling Quality control inspection Other overhead costs Total Budgeted Overhead Cost $150,000 52,500 37,500 90.000 $330.000 Cost Driver Number of setups Units of raw materia! Number of inspection Machine hours Overhead Cost Pool Machine setups Material handling Quality control Other overhead Budgeted Level for Cost Driver 100 setups 50,000 units 1,000 inspections 15,000 machine hours Overhead Ratc $1,500 per seun $1.05 per unit $37.50 per inspectio S6 per machine hour Order no. 610 has the following production requirements: Machine setups Raw material Inspections Machine hours 5 setups 10,000 units 12 inspections 600 machine hours

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 8P: Carlo Lee Corp. has established the following standard cost per unit: Although 10,000 units were...

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ABC Inc. spent a total of $48,000 on factory overhead. Of this, $28,000 was fixed overhead. ABC Inc. had budgeted $27,000 for fixed overhead. Actual machine hours were 5.000. Standard hours for units made were 4,800. The standard variable overhead rate was $4.10. What is the variable overhead rate variance?
Carlo Lee Corp. has established the following standard cost per unit: Although 10,000 units were budgeted, only 8,800 units were produced. The purchasing department bought 55,000 lb of materials at a cost of $123,750. Actual pounds of materials used were 54,305. Direct labor cost was $186,550 for 18,200 hours worked. Required: Make journal entries to record the materials transactions, assuming that the materials price variance was recorded at the time of purchase. Make journal entries to record the labor variances.
USD Inc. has established the following standard cost per unit: Although 10,000 units were budgeted, 12,000 units were produced. The Purchasing department bought 50,000 lb of materials at a cost of $237,500. Actual pounds of materials used were 46,000. Direct labor cost was $287,500 for 25,000 hours worked. Required: Make journal entries to record the materials transactions, assuming that the materials price variance was recorded at the time of purchase. Make journal entries to record the labor variances.
Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)
Direct materials and direct labor variance analysis Faucet Industries Inc. manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Faucet Industries has 60 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Instructions Determine (a) the standard cost per unit for direct materials and direct labor; (h) the price variance, quantity variance, and total direct materials cost variance; and (c) the rate variance, time variance, and total direct labor cost variance.
Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
John Sheng, a cost accountant at Starlet Company, is developing departmental factory overhead application rates for the companys Tooling and Fabricating departments. The budgeted overhead for each department and the data for one job are as follows: Using the departmental overhead application rates, total overhead applied to Job 231 in the Tooling and Fabricating departments will be: a. 225. b. 303. c. 537. d. 671.
Fargo Co. manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Budgeted fixed overhead is $60,000 per period. The standard costs per batch follow: During the period, 503 batches were manufactured, and the following costs were incurred: Required: Calculate the variances for materials, labor, and overhead. For overhead, use the two-variance method. (Hint: Please use the information given about the budgeted fixed overhead to compute the variable overhead rate.)
Cynthia Rogers, the cost accountant for Sanford Manufacturing, is preparing a management report that must include an allocation of overhead. The budgeted overhead for each department and the data for one job are as follows: Using the departmental overhead application rates, and allocating overhead on the basis of direct labor hours, overhead applied to Job 231 in the Tooling Department would be: a. 44.00. b. 197.50. c. 241.50. d. 501.00.
Refer to Cornerstone Exercise 8.13. In March, Nashler Company produced 163,200 units and had the following actual costs: Required: 1. Prepare a performance report for Nashler Company comparing actual costs with the flexible budget for actual units produced. 2. What if Nashler Companys actual direct materials cost were 1,175,040? How would that affect the variance for direct materials? The total cost variance?
The controller for Muir Companys Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided to concentrate on the past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on overhead costs, number of machine hours, number of setups, and number of purchase orders are in the following table. Required: 1. Calculate an overhead rate based on machine hours using the total overhead cost and total machine hours. (Round the overhead rate to the nearest cent and predicted overhead to the nearest dollar.) Use this rate to predict overhead for each of the 12 months. 2. Run a regression equation using only machine hours as the independent variable. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the intercept and x-coefficient to the nearest cent and predicted overhead to the nearest dollar.) Is this flexible budget better than the budget in Requirement 1? Why or why not?
Professional labor cost budget Based on the data in Exercise 13-5 and assuming that the average compensation per hour for staff is $36 and for partners is $300. prepare a professional labor cost budget for Day & Spieth, CPAs, for the year ending March 31. 20Y6. Use the following column headings: