Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect - cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2010; Direct materials $140,000; Direct labor (3, 500 hours @ $11/hour) $38,500; Indirect labor $10,000; Plant facility rent $30,000; Depreciation on plant machinery and equipment $15,000; Sales commissions $20,000; Administrative expenses $25,000. The actual amount of manufacturing overhead costs incurred in June 2010 totals $278, 500 $ 100,000 $55,000 $40,000:

Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect - cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2010; Direct materials $140,000; Direct labor (3, 500 hours @ $11/hour) $38,500; Indirect labor $10,000; Plant facility rent $30,000; Depreciation on plant machinery and equipment $15,000; Sales commissions $20,000; Administrative expenses $25,000. The actual amount of manufacturing overhead costs incurred in June 2010 totals $278, 500 $ 100,000 $55,000 $40,000:

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Description: Philadelphia Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect - cost rate of $15 per direct labor - hour. The following data are obtainedfrom the accounting records for June 2010; Direct materi

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 7EB: A company estimates its manufacturing overhead will be $840,000 for the next year. What is the...

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Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)
A company estimates its manufacturing overhead will be $840,000 for the next year. What is the predetermined overhead rate given each of the following Independent allocation bases? Budgeted direct labor hours: 90,615 Budgeted direct labor expense: $750000 Estimated machine hours: 150,000
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