EXERCISE 3A-1 Overhead Rates and Capacity Issues [LO1, LO2, LO7, LO8]Estate Pension Services helps clients to set up and administer pension plans that are in compliancewith tax laws and regulatory requirements. The firm uses a job-order costing system in which over-head is applied to clients' accounts on the basis of professional staff hours charged to the accounts.Data concerning two recent years appear below:20102011Estimated professional staff hours to be charged toclients' accounts .....2,400$144,0002,250$144,000Estimated overhead cost .Professional staff hours available3,0003,000"Professional staff hours available" is a measure of the capacity of the firm. Any hours availablethat are not charged to clients' accounts represent unused capacity. All of the firm's overhead isfixed.Required:1. Jennifer Miyami is an established client whose pension plan was set up many years ago. Inboth 2010 and 2011, only five hours of professional staff time were charged to Ms. Miyami'saccount. If the company bases its predetermined overhead rate on the estimated overhead costand the estimated professional staff hours to be charged to clients, how much overhead costwould have been applied to Ms. Miyami's account in 2010? In 2011?2. Suppose that the company bases its predetermined overhead rate on the estimated overheadcost and the estimated professional staff hours to be charged to clients as in (1) above. Alsosuppose that the actual professional staff hours charged to clients' accounts and the actualoverhead costs turn out to be exactly as estimated in both years. By how much would theoverhead be underapplied or overapplied in 2010? In 2011?3. Refer back to the data concerning Ms. Miyami in (1) above. If the company bases its predeter-mined overhead rate on the professional staff hours available, how much overhead cost wouldhave been applied to Ms. Miyami's account in 2010? In 2011?4. Suppose that the company bases its predetermined overhead rate on the professional staffhours available as in (3) above. Also, suppose that the actual professional staff hours chargedto clients' accounts and the actual overhead costs turn out to be exactly as estimated in bothyears. By how much would the overhead be underapplied or overapplied in 2010? In 2011?

"Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Answered: EXERCISE 3A-1 Overhead Rates and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

In the equation Y = P4,000 + P3X; Y is the cost of workers' compensation insurance and X is direct labor hours. According to this equation, a 100-hour change in total direct labor hours will change the cost of workers compensation insurance by A. P4,000. B. P 300. C. P4,300. D. none of the above amounts.
Question 5.2 Xplornet Ltd. is an internet service provider. The company had 14,000,000 subscribers in 2021, and employed 18 customer service representatives. During 2021 each customer service representative worked 7 1/2 hours per day for 236 days at a fixed annual salary of $42,000. The company received 110,000 telephone calls from its customers in 2021 that lasted fifteen minutes on average. Required Calculate the cost of unused customer service capacity in 2021 with the assumption that customer service costs are engineered costs.
Q3. Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service operates January 2 through April 15 at a counter in a local grocery store. All jobs are classified into one of three categories: standard, multiform, and complex. Following is information for last year. Also, last year, the fixed cost of rent, utilities, and so forth were $50,000. Standard Multiform Complex Billing rate $60 $125 $250 Average variable costs (30) (75) (150) Average contribution margin $20 $50 $100 Number of returns prepared 1,750 600 350 (a.) Determine Joe's break-even dollar sales volume. Product , Weighted Selling Price , Weighted Contribution Margin Standard Multiform Complex Total Contribution margin ratio: Break-even sales volume: (b.) Determine Joe's margin of safety in sales dollars.
Insurance An insurance company has looked at the total salary costs of its call centre staff, which it has traditionally treated as a fixed overhead and not attempted to apportion to individual services. It has determined the following for last year: Total Wages Time on selling policies Time on claims handling Time on policy changes Time on policy cancelling Other activities Call staff £200,000 50% 30% 10% 5% 5% Deputy managers £100,000 10% 30% 30% 5% 25% Managers £80,000 5% 15% 20% 10% 50% Last year, the company sold 100,000 new policies, handled 30,000 claims, made changes to 5,000 policies and cancelled 1,000 policies. Calculate the staffing costs that the company must cover in selling policies, handling claims, changing policies and cancelling policies.
14. An example of labor-related costs is: a. fringe benefits b. factory labor c. bonus pay d. operating expense 15. Wages in excess of the regular rate paid for work after normal closing time is: a. Vacation and holiday pay b. Pension pay c. Overtime premium d. Regular wage 16. If the job is taken as a rush order with the knowledge that overtime will be necessary, the overtime premium should be charged to: a. General expense b. Factory overhead c. Specific job d. Selling expense 17. If the overtime premium is charge to specific job, it should be debited to: a. Work in process account b. General expense account c. Manufacturing overhead account d. Selling expense account
QUESTION 22 ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business: Service Departments Production Lending Departments HR Accounting Commercial Consumer Department cost $110,000 $225,500 $2,800,000 $1,600,000 Number of employees 2 3 9 11 Number of transactions 750 2,250 3,650 6,350 HR costs are allocated on the basis of number of employees. Accounting cost are allocated based on the number of transactions. Required: Using the Direct Method, allocate the amounts of overhead from the HR service department to Consumer production department. $60,500 $66000 $62,013 $60,000
Question 4 What is the value of direct labor allocated to Job 1? Question 4 options: $160,000 $140,000 $60,000 $30,000 $50,000 Question 5 What is the value of direct labor allocated to Job 2? Question 5 options: $140,000 $50,000 $160,000 $30,000 $60,000 Question 6 What is the value of direct labor allocated to Job 3? Question 6 options: $160,000 $50,000 $140,000 $30,000 $60,000 Question 7 What is the value of factory overhead allocated to Job 1? Question 7 options: $50,000 $40,000 $60,000 $32,000 $8,000 Question 8 What is the value of factory overhead allocated to Job 2? Question 8 options: $50,000 $32,000 $60,000 $40,000 $8,000 Question 9 What is the value of factory overhead allocated to Job 3? Question 9 options: $50,000 $40,000 $60,000 $32,000 $8,000 Question 10 What is the…
Do not copy from bartleby In 20x1, XYZ Company enters into a construction contract with a customer. The contract price is P10,000,000.Information on the contract follows:20X1 20X2 20X3Contract costs incurred during the year P2,645,132 P236,451 P2,657,000Estimated costs to complete 2,697,451 2,116,777 -Progress Billings 5,000,000 3,000,000 2,000,000Collections on progress billings 2,000,000 4,000,000 4,000,000Using the cost-to-cost method, compute the following: Note: Use up to two (2) decimal places in presenting the answer for percentage of completion. Use six (6)decimal places when applying the percentage.7. Realized gross profit in 20x2 _____________8. The balance of "Contract Liability" at the end of 20x2 _____________9. Revenue that should be recognized in 20x3 _____________10. Realized gross profit in 20x3
Question 19 What is the January Sales Revenue related to Job 1? Question 19 options: $450,000 $500,000 $380,000 $540,000 $100,000 Question 20 What is the January Sales Revenue related to Job 2? Question 20 options: $500,000 $380,000 $450,000 $100,000 $540,000
Required information The Foundational 15 (Algo) [LO11-1, LO11-2] Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,400,000 Variable expenses 510,000 Contribution margin 890,000 Fixed expenses 610,000 Net operating income $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales $ 280,000 Contribution margin ratio 50 % of sales Fixed expenses $ 98,000 The company’s minimum required rate of return is 15%. Foundational 11-8 (Algo) 8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)
Required information The Foundational 15 (Algo) [LO11-1, LO11-2] Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,400,000 Variable expenses 510,000 Contribution margin 890,000 Fixed expenses 610,000 Net operating income $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales $ 280,000 Contribution margin ratio 50 % of sales Fixed expenses $ 98,000 The company’s minimum required rate of return is 15%. Foundational 11-7 (Algo) 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))
Required information The Foundational 15 (Algo) [LO11-1, LO11-2] Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,400,000 Variable expenses 510,000 Contribution margin 890,000 Fixed expenses 610,000 Net operating income $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales $ 280,000 Contribution margin ratio 50 % of sales Fixed expenses $ 98,000 The company’s minimum required rate of return is 15%. Foundational 11-5 (Algo) 5. What is the turnover related to this year’s investment opportunity? (Round your answer to 1 decimal place.)

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS