ISE 2-7 Prder Costing; working Backwards Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $15 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 54,500 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below: Job Alpha Direct materials ? Direct labor ? Manufacturing overhead applied ? Total job cost $1,533,500 Job Omega Direct materials $235,000 Direct labor 345,000 Manufacturing overhead applied 184,000 Total job cost $764,000 Required: 1. Calculate the plantwide predetermined overhead rate. 2. Complete the job cost sheet for Job Alpha.

ISE 2-7 Prder Costing; working Backwards Hahn Company uses a job-order costing system. Its plantwide predetermined overhead rate uses direct labor-hours as the allocation base. The company pays its direct laborers $15 per hour. During the year, the company started and completed only two jobs-Job Alpha, which used 54,500 direct labor-hours, and Job Omega. The job cost sheets for the these two jobs are shown below: Job Alpha Direct materials ? Direct labor ? Manufacturing overhead applied ? Total job cost $1,533,500 Job Omega Direct materials $235,000 Direct labor 345,000 Manufacturing overhead applied 184,000 Total job cost $764,000 Required: 1. Calculate the plantwide predetermined overhead rate. 2. Complete the job cost sheet for Job Alpha.

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 10.4.3C: Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost...

See similar textbooks

Similar questions

Decision making with job order costs Alvarez Manufacturing Inc. is a job shop. The management of Alvarez Manufacturing Inc. uses the cost information from the job sheets to assess cost performance. Information on the total cost, product type, and quantity of items produced is as follows: Date Job No. Product Quantity Amount Jan. 2 1 TT 520 16,120 Jan. 15 22 SS 1,610 20,125 Feb. 3 30 SS 1,420 25,560 Mar. 7 41 TT 670 15,075 Mar. 24 49 SLK 2,210 22,100 May 19 58 SLK 2,550 31,875 June 12 65 TT 620 10,540 Aug. 18 78 SLK 3,110 48,205 Sept. 2 82 SS 1,210 16,940 Nov. 14 92 TT 750 8,250 Dec. 12 98 SLK 2,700 52,650 a. Develop a graph for each product (three graphs), with Job Number (in date order) on the horizontal axis and Unit Cost on the vertical axis. Use this information to determine Alvarez Manufacturing Inc.'s cost performance over time for the three products. b. What additional information would you require in order to investigate Alvarez Manufacturing Inc.s cost performance more precisely?
Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What do you think is a possible solution?
Factory overhead rate Fabricator Inc., a specialized equipment manufacturer, uses a job order cost system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $3,000 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $3,000. This means that while direct labor makes up only 5% of our total product cost, it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $4,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30~minute error in our estimate of assembly time is worth $ 1,500. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. What did the engineer mean about the large overhead rate being a disadvantage when plating bids and seeking new business?
Factory overhead rate Salvo Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now 1,500 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following: Our accounting system doesnt make any sense to me. It tells me that every labor hour carries an additional burden of 1,500. This means that direct labor makes up only 6% of our total product cost, yet it drives all our costs. In addition, these rates give my design engineers incentives to design out direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I wont be surprised if next year the rate is 2,000 per direct labor hour. Im also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30-minute error in our estimate of assembly time is worth 750. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business. 1. What is the engineer's concern about the overhead rate going up and up? 2. What did the engineer mean about the large overhead rate being a disadvantage when placing bids and seeking new business? 3. What do you think is a possible solution?
Analyzing manufacturing cost accounts Fire Rock Company manufactures Designer paddle boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for June: In addition, the following information is available: a . Materials and direct labor were applied to the following jobs in June: b. factory overhead is applied to each job at a rate of 140% of direct labor cost c. The June 1 Work in Process balance consisted of two job as follows: Job No. Style Work In Process, June 1 201 T100 16,500 202 T200 44,000 Total 60,500 d. Customer jobs completed and units sold in June were as follows: Instructions 1. Determine the missing amounts associated with each letter. Provide supporting calculations by completing a table with the following headings: 2. Determine the June 50 balances for each of the inventory accounts and factor overhead.