Please answer E O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. Itonly bullds to order (each unit is bullt to customer specifications). O'Leary uses a normal Job costing system. Direct labor at O'Leary Ispald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead Is assigned to Jobs by apredetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years(adjusted for price-level changes usling current prices and wage rates) as follows.Year 1Year 2Direct labor-hours worked68, 80055,800Manufacturing overhead costs incurredIndirect labor$2,832, 0001,832, 880688, 000645, 000141, 600781,4782,036, 5ee787,430$2, 232, 800837,800558, 000548, 800141,600661,6502,836, 500805, 250$7,812, 800Employee benefitsSuppliesPowerHeat and lightSupervisionDepreciationProperty taxes and insuranceTotal manufacturing overhead costs$8,944, 000At the beginning of year 3, O'Leary has two Jobs, which have not yet been delivered to customers. Job MC-270 was completed onDecember 27. year 2. It is scheduled to ship on January 7, year 3. Job MC-275 Is still n progress. For the purpose of computing thepredetermined overhead rate. O'Leary uses the prevlous year's actual overhead rate. Data on direct materlal costs and direct labor-hours for these Jobs In year 2 follow.Job MC-270$271,8802,590 hoursJob MC-275Direct naterial costsDirect labor-hours$496,8003,290 hoursDuring year 3, O'Leary Incurred the following direct materlal costs and direct labor-hours for all jobs worked in year 3. Including thecompletion of Job MC-275.Direct naterial costs$11,841,80075,800$ 9,552, 808Direct labor-hoursActual manufacturing overheadAt the end of year 3, there were four Jobs that had not yet shipped. Data on these Jobs follow.MC-389MC-390MC-397MC-399$68,8e02,790 hoursFinishedDirect materials$45,0001,758 hoursFinished$165, 3006,190 hoursIn progress$30,7801,390 hoursIn progressDirect labor-hoursJob statu Complete this question by entering your answers in the tabs below.Required ARequired BRequired CRequired DRequired EA customer has asked O'Leary to bid on a job to be completed in year 4. O'Leary estimates that the job will require about$93,400 in direct materials and 5,090 direct labor-hours. Because of the economy, O'Leary expects demand for its services tobe low in year 4, and the CEO wants to bid aggressively, but does not want to lose any money on the project. O'Learyestimates that there would be virtually no sales or administrative costs associated with this job. What is the minimum amountO'Leary can bid on the job and still not incur a loss?Show less AMinimum amount< Required DRequired E>

Job costing appears to be a costing technique used to analyze the cost of particular projects that…

O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. only bulds to order (each unit is built to customer specifications). O'Leary uses a normal job costing system. Direct labor at O'Leary Is pald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows. Year 1 Year 2 Direct labor-haurs worked 68, 800 55,800 Manufacturing overhead costs incurred Indirect labor Employee benefits Supplies Paver $2,832, 000 1,032,eee 688, 00e 645,000 141,600 781,470 2,036, 500 787,430 $2, 232, e00 837,000 558, e00 540, eee 141, 600 661,65e 2,036, 500 se5, 250 Heat and light Supervision Depreciation Property taxes and insurance

O'Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. only bulds to order (each unit is built to customer specifications). O'Leary uses a normal job costing system. Direct labor at O'Leary Is pald $26 per hour, but the employees are not pald if they are not working on Jobs. Manufacturing overhead is assigned to jobs by a predetermined rate on the basis of direct labor-hours. The company Incurred manufacturing overhead costs during two recent years (adjusted for price-level changes using current prices and wage rates) as follows. Year 1 Year 2 Direct labor-haurs worked 68, 800 55,800 Manufacturing overhead costs incurred Indirect labor Employee benefits Supplies Paver $2,832, 000 1,032,eee 688, 00e 645,000 141,600 781,470 2,036, 500 787,430 $2, 232, e00 837,000 558, e00 540, eee 141, 600 661,65e 2,036, 500 se5, 250 Heat and light Supervision Depreciation Property taxes and insurance

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 22E: CleanCom Company specializes in cleaning commercial buildings and construction sites. Each building...

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Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations: The total cost of purchasing and receiving parts used in manufacturing is 60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were 48,000 and 12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
Nutts management is very concerned about the cost of overhead on its jobs. When jobs are complete, overhead costs should be between 15% and 20% of total costs. For example, the labor cost on Job 8958 is 25% of total costs, higher than the norm. Open Job 8961 and click the Chart sheet tab. A pie chart appears showing the cost components on that job. Record the labor cost percentage in the space provided. Repeat this for each of the jobs worked on in August. Did Nutt maintain good cost control on all its jobs? Explain. Worksheet. During September, Job 8963 required two additional material requisitions to complete the job. Open JOB8963 and modify the job cost sheet to include an area for four direct material requisition entries instead of three. Then enter the following two materials requisitions onto the worksheet: Preview the printout to make sure it will print neatly on one page, and then print the worksheet. Save the completed worksheet as JOBT. Chart. Open JOB8964 and click the Chart sheet tab. Prepare a bar chart for JOB8964 showing the amount of material, labor, and overhead required to complete the job. Use the Chart Data Table found in rows 4246 as a basis for preparing the chart. Enter your name somewhere on the chart. Save the file again as J0B8964. Print the chart.
CleanCom Company specializes in cleaning commercial buildings and construction sites. Each building and site is different, requiring amounts and types of supplies and labor for each job. CleanCom estimated the following for the year: During the year, the following actual amounts were experienced: If CleanCom uses a normal costing system and overhead is applied on the basis of direct labor hours, what is the cost of cleaning a construction site that takes 140 of direct materials and 21 direct labor hours? a. 455 b. 508 c. 648 d. 644
Brady Furniture Company manufactures wooden oak furniture. The company employs a job cost system to trace manufacturing costs to jobs. Each job represents a batch of furniture of the same type. Information regarding direct materials on selected jobs throughout the year is as follows: Dining tables are the most difficult furniture item in Bradys catalog to manufacture. Thus, the most skilled employees are scheduled to make dining tables, unless they are required for other jobs. a. Determine the material cost per unit for each job. b. Use the January material cost per unit for each type of furniture as the base material cost. For each month and each type of furniture, determine the unit material cost as a percent of the base unit material cost. Round percent to one decimal place. Use the following table format: c. Develop a line chart of the percent of unit material cost to the base unit material cost. Place the months on the horizontal axis and use three lines for the three different types of furniture. d. Interpret the chart. What is happening to the dining tables?
Vargas, Inc., produces industrial machinery. Vargas has a machining department and a group of direct laborers called machinists. Each machinist is paid 25,000 and can machine up to 500 units per year. Vargas also hires supervisors to develop machine specification plans and to oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee three machinists, at most. Vargass accounting and production history reveal the following relationships between units produced and the costs of direct labor and supervision (measured on an annual basis): Required: 1. Prepare two graphs: one that illustrates the relationship between direct labor cost and units produced, and one that illustrates the relationship between the cost of supervision and units produced. Let cost be the vertical axis and units produced the horizontal axis. 2. How would you classify each cost? Why? 3. Suppose that the normal range of activity is between 2,400 and 2,450 units and that the exact number of machinists is currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 400 units. How much will the cost of direct labor increase (and how will this increase be realized)? Cost of supervision?
York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month. York incurs $50 in indirect material cost. $150 in administrative labor, $300 in utilities, and $250 in depreciation expense. What is the predetermined overhead rate if direct labor hours are considered the cost driver? What is the cost of Job 0325? What is the overhead incurred during the month?
Lansing. Inc., provided the following data for its two producing departments: Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required: 1. Calculate the overhead rates for each department. 2. Using departmental rates, assign overhead to live two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours? 3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
A local barbershop cuts the hair of 1,200 customers per month. The clients are men, and the barbers offer no special styling. During the month of May, 1,200 customers were serviced. The cost of haircuts includes the following: Required: 1. Explain why process costing is appropriate for this haircutting operation. 2. Calculate the cost per haircut. 3. Can you identify some possible direct materials used for this haircutting service? Is the usage of direct materials typical of services? If so, provide examples of services that use direct materials. Can you think of some services that would not use direct materials?
Darnell Poston, owner of Poston Manufacturing, Inc., wants to determine the cost behavior of labor and overhead. Darnell pays his workers a salary; during busy times, everyone works to get the orders out. Temps (temporary workers hired through an agency) may be hired to pack and prepare completed orders for shipment. During slower times, Darnell catches up on bookkeeping and administrative tasks while the salaried workers do preventive maintenance, clean the lines and building, etc. Temps are not hired during slow times. Darnell found that workers salaries, temp agency payments, rentals, utilities, and plant and equipment depreciation are the largest dollar accounts. He believes that workers salaries and plant and equipment depreciation are fixed, temp agency payments are associated with the number of orders (since temp workers are used to pack and prepare completed orders for shipment), and electricity is associated with the number of machine hours. When the number of different parts stored by Poston exceeds the space in the materials storeroom, Darnell rents nearby warehouse space. He can rent as much or as little space as he wants on a month-to-month basis. Therefore, he believes warehouse rental payments are variable with the number of parts purchased and stored. The account balances for the past six months as well as the six-month total are as follows: Information on number of machine hours, orders, and parts for the six-month period follows: Required: 1. Calculate the monthly average account balance for each account. Calculate the average monthly amount for each of the three drivers. 2. Calculate fixed monthly cost and the variable rates for temp agency payments, warehouse rent, and electricity. Express the results in the form of an equation for total cost. 3. In July, Darnell predicts there will be 420 orders, 250 parts, and 5,900 machine hours. What is the total labor and overhead cost for July? 4. What if Darnell buys a new machine in July for 24,000? The machine is expected to last 10 years and will have no salvage value at the end of that time. What part of the cost equation will be affected? How? What is the new expected cost in July?
Exotic Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: The average shop direct labor rate is 37.50 per hour. Determine the predetermined shop overhead rate per direct labor hour.