2021.12.0203:13Cost AccountingCHAPTER238Cost AccountingChapter 8 Accounting for Factory OverheadProblem 4The Ellery Corporation uses the job order coșt system of accounting. Shown below isa list of the jobs completed during the month of March showing the charges formaterials requisitioned and for direct labor cost.Problem 6The ABC Company has two service departments and two producing departmentsJob123Material CostP 3001,080Service Departments' to costs:Department 1 - RepairDepartment 2 - CafeteriaP 14,00011,000Direct laborP 6001249401,4005,120Próducing Departments' Factory OH CostsDepartment A - MachineryDepartment B - Assembly52,50048,0001257201264,200Required:Assuming that factory overhead is applied on the basis of direct labor costs and thatthe predetermined rate is 180%, compute:1. The amount of overhead to be added to the cost of each job completed2. The total cost of each job completed during the month.Additional informationSquare Feet1,5001,8002,0003,0008.300The costs of the Repair Department are allocated on the basis of square feet.The costs of the Cafeteria Department are allocated on the basis of estimateddirect labor hours. The producing departments use estimated direct laborhours: 1,500 in Department A and 1,250 in Department B.Required: Allocate the total costs of the service departments to the producingdepartments ( compute the departments' factory rate) by using the following:Est. Direct Labor Hours3,5001,2002,3001,7008,700DepartmentRepairCafeteriaMachineryAssemblyTotalProblem 5Thermal Corporation has two producing department and two service departmentslabeled P1, P2, S1, and S2, respectively. Direct costs for each department and theproportion of services costs used by various departments are as follows:Proportion of services used by:P2CostDirectCenterP1CostsP.S1S2P190,00060,00020,00032,000P21. Direct method.10S1.S2.80.102. Step method start with the Repair Department.20.50.30In calculating predetermined overhead rates, machine hours are used as the base in PIProblem 7and direct labor hours as the base in P2.Machine hoursDirect labor hoursP150,00040,000P240,00020,000Central Parkway Corp. has two producing and two service departments labeled P1,P2, S1, S2, respectively. Direct costs for each department and the proportion ofservice costs used by the various departments are as follows:Requirements:1. Allocate the şervice department costs to operating departments and compute thefactory overhead rate for P1 and P2 using the following methods:A. Direct Methodb. Step method - start with S1Proportion of services used by:P1CostDirectÇenterP2CostsP 120,00080,00025,00010,000S1S2P1P2S1.25.50.25:50.40c. Algebraic method2. Assume the company uses just one basis for applying overhead to jobs goingthrough both P1 and P2, compute the overhead rate using direct labor hours asbase.S2.10Required: Allocate the service department cost using algebraic method.19 19 4 Cost AccountingCHAPTER2021.12.02 03:13Cost Accounting241Problem 8Chapter 8 Accounting for Factory OverheadProblem 11The Strawberry Corporation has the following information relating to applied andactual factory overhead:Megastar Company's normal operating capacity is estimated at 95,000 machine hoursper month. At this operating level, fixed factory overhead is estimated to be P 34,200and variable factory overhead is.estimated to be P41,800. During November, thecompany operated 100,000 machine hours. Actual factory overhead for the monthtotaled P78,600.Required: Compute for the following1. The over or underapplied factory overhead2. The spending variance.3. The idle capacity variance.P30,50039,700Applied factory overhead costs are in the following accounts.P32,0003,5004,200Factory overhead controlApplied factory overheadCost of goods soldEnding work in process inventoryEnding finished goods inventoryRequired:a. Allocate the under or overapplied factory overhead to those accounts distortedby using what turned out to be an incorrect factory overhead application rate.b. Prepare the end-of-period entries.. Problem 9Normal annual capacity for Abner Company is 72,000 units, with fixed factoryoverhead budgeted at P33,840 and an estimated variable factory overhead rate forP4.20. per unit. During October, actual production was 5,400 units, with a totaloverhead of P15,910.Required: Compute for the following1. The applied factory overhead2. The over or underapplied factory overhead3. The spending varianceProblem 12For many years Tinor Company has used a manufacturing overhead rate based ondirect labor hours. A new plant accountant has suggested that the company may beable to assign overhead costs to products more accurately by using an activity-basedcosting system. The accountant explains that by creating an overhead rate for eachproduction activity that causeş overhead costs, the resulting product costs will reflectan accurate measure of overhead cost. The direct material cost is P120 per unit. Thebudgeted hours is 8,030 direct labor hours. The accountant has identified activitycenters to which overhead costs are assigned. The cost pool amounts for these centersand their selected activity drivers for 2012:4. The idle capacity varianceACTIVITY CENTERSCOSTSACTIVITY DRIVERSProblem 10Materials handlingScheduling and setupsDesign sectionNo. of partsP 60,00080,00010,75050.000P 200.7501,200 times handled400 setups100 changes500 partsNorman Corporation uses a flexible budget system and prepared the followinginformation for 2012.Normal Capacity Maximum CapacityPercentage of capacityDirect labor hoursTotal budgeted factory overhead P252,000Norman planned to operate at normal capacity but actually operated, at 90% ofmaximum capacity during 2012. The actual factory overhead for 2012 was P273,000:%0848,000The company's products and other operating statistics follow:60,000P270,000No. ofNo. ofQty.ProducedNo. of time No. ofProd.PartsChangesSetupsCostP6,00018,000HandledA.B.Required:1. Compute the unit cost for each product using direct labor hours as the overheadapplication base.2. Compute the unit costs for each product using activity-based costing20.40.3.5.Requirements:1. Using HI-LÓ method, compute for the variable rate per hour.2. Détermine the fixed portion of the budgeted factory overhead.3. Compute for the spending variance.4. Compute for the Idle capacity variance.19 192017.26

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Description: 2021.12.0203:13Cost AccountingCHAPTER238Cost AccountingChapter 8 Accounting for Factory OverheadProblem 4The Ellery Corporation uses the job order coșt system of accounting. Shown below isa list of the jobs completed during the month of March showin

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