E8.1 (LO 1, 2, 3), AP HoldOn! Co. produces magnetized clips that its customers use to hang items on their refrigerator doors. In its effort to manufacture these clips, HoldOn! incurred the following costs this year (amounts are in thousands). Cost Amount Product or Period Direct or Indirect Plastic material and springs for clips $320 CEO’s salary 110 Advertising 25 Research and development 15 Wages for factory workers 420 Utility costs in plant 67 Plant supervisor salaries 186 Depreciation of plant assets 54 Salaries and commissions to salespeople 205 Required Complete the above table by classifying each cost as either a product cost or a period cost; for product costs, further classify as a direct cost or an indirect cost. Calculate total direct costs and total indirect (MOH) costs. Assume HoldOn! used a budgeted MOH rate to apply MOH costs, and the total cost applied this year is $285,000. How much did the company under- or overapply for its MOH costs? What may have caused this difference?
E8.1 (LO 1, 2, 3), AP HoldOn! Co. produces magnetized clips that its customers use to hang items on their refrigerator doors. In its effort to manufacture these clips, HoldOn! incurred the following costs this year (amounts are in thousands). Cost Amount Product or Period Direct or Indirect Plastic material and springs for clips $320 CEO’s salary 110 Advertising 25 Research and development 15 Wages for factory workers 420 Utility costs in plant 67 Plant supervisor salaries 186 Depreciation of plant assets 54 Salaries and commissions to salespeople 205 Required Complete the above table by classifying each cost as either a product cost or a period cost; for product costs, further classify as a direct cost or an indirect cost. Calculate total direct costs and total indirect (MOH) costs. Assume HoldOn! used a budgeted MOH rate to apply MOH costs, and the total cost applied this year is $285,000. How much did the company under- or overapply for its MOH costs? What may have caused this difference?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter10: Accounting Systems For Manufacturing Operations
Section: Chapter Questions
Problem 10.3E: Classifying costs as factory overhead Which of the following items are properly classified as part...
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E8.1 (LO 1, 2, 3), AP HoldOn! Co. produces magnetized clips that its customers use to hang items on their refrigerator doors. In its effort to manufacture these clips, HoldOn! incurred the following costs this year (amounts are in thousands).
Cost Amount Product or Period Direct or Indirect
Plastic material and springs for clips $320
CEO’s salary 110
Advertising 25
Research and development 15
Wages for factory workers 420
Utility costs in plant 67
Plant supervisor salaries 186
Depreciation of plant assets 54
Salaries and commissions to salespeople 205
Required
Complete the above table by classifying each cost as either a product cost or a period cost; for product costs, further classify as a direct cost or an indirect cost.
Calculate total direct costs and total indirect (MOH) costs.
Assume HoldOn! used a budgeted MOH rate to apply MOH costs, and the total cost applied this year is $285,000. How much did the company under- or overapply for its MOH costs? What may have caused this difference?
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