Answered: Question 3 David Ltd manufactures af… | bartleby

Financial & Managerial Accounting

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter22: Performance Evaluation Using Variances From Standard Costs

Section: Chapter Questions

Problem 22.4APR: Factory overhead cost variance report Tiger Equipment Inc., a manufacturer of construction...

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Question 3
$45
$35
Variable Overheads $15
David Ltd manufactures and sells a single product. The standard selling price per unit is
$120. The variable cost per unit details are as follows:
Direct Material
Direct Labour
Required:
The company budgeted fixed overhead cost of $30,000. They budgeted to produce and sell
3,000 units.
(a) Calculate:
ti.
(i) The cost and profit per unit.
(ii) The Profit in total for the period.
(b) Calculate:
cast
- call
payback: !!
Tatal fined
(i) Breakeven Point in units and value(sales)
Serwis
(ii) Margin of Safety in units and value (sales)
(iii) Sales required to achieve a profit of $70,000.
(c) Outline the 3 assumptions of Cost-Volume-Profit (CV
-
the investment in two
Hows:

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Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
Factory overhead cost variance report Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours. During May, the department operated at 8,860 hours, and the factory overhead costs incurred were indirect factory wages, 32,400; power and light, 21,000; indirect materials, 18,250; supervisory salaries, 20,000; depreciation of plant and equipment, 36,200; and insurance and property taxes, 15,200. Variable costs: Indirect factory wages 30,240 Power and light 20,160 Indirect materials 16,800 Total variable cost 67,200 Fixed costs: Supervisory salaries 20,000 Depreciation of plant and equipment 36,200 Insurance and property taxes 15,200 Total fixed cost 71,400 Total factory overhead cost 138,600 Instructions Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,860 hours.

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