TB MC Qu. 5-63 (Algo) Manufacturing overhead: Metal CompanyMetal Company budgeted $564,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead:Budgeted Level for CostDriverOverhead Cost PoolMaterials handlingBudgeted OverheadDirect laborDirect materialsMachine setupMachine hoursInspectionsCost$164,00014,4001,80015,000Machine setupMachine repairInspectionsRequirements for Job # 971 which manufactured 4 units of product:20 hours220 pounds40 setups15,900 machine hours15 inspectionsSaved4,100 pounds480 setups30,000 machine hours250 inspectionsOverhead Cost DriverWeight of materialsNumber of setupsMachine hoursNumber of inspectionsIf Metal Company uses a volume-based overhead rate based on direct labor hours, the manufacturing overhead for Job # 971 is:

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Description: TB MC Qu. 5-63 (Algo) Manufacturing overhead: Metal CompanyMetal Company budgeted $564,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead:Budgeted Level for CostDriverOverhead Cost PoolMaterials ha

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TB MC Qu. 5-63 (Algo) Manufacturing overhead: Metal Company Metal Company budgeted $564,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead: Budgeted Level for Cost Driver Overhead Cost Pool Materials handling Machine setup Machine repair Inspections Budgeted Overhead Cost $164,000 14,400 1,800 15,000 Requirements for Job # 971 which manufactured 4 units of product: Direct labor Direct materials Machine setup Machine hours Inspections 20 hours 220 pounds 40 setups 15,900 machine hours 15 inspections 4,100 pounds 480 setups 30,000 machine hours. 250 inspections Overhead Cost Driver Weight of materials Number of setups Machine hours Number of inspections If Metal Company uses a volume-based overhead rate based on direct labor hours, the manufacturing overhead for Job # 971 is:

TB MC Qu. 5-63 (Algo) Manufacturing overhead: Metal Company Metal Company budgeted $564,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead: Budgeted Level for Cost Driver Overhead Cost Pool Materials handling Machine setup Machine repair Inspections Budgeted Overhead Cost $164,000 14,400 1,800 15,000 Requirements for Job # 971 which manufactured 4 units of product: Direct labor Direct materials Machine setup Machine hours Inspections 20 hours 220 pounds 40 setups 15,900 machine hours 15 inspections 4,100 pounds 480 setups 30,000 machine hours. 250 inspections Overhead Cost Driver Weight of materials Number of setups Machine hours Number of inspections If Metal Company uses a volume-based overhead rate based on direct labor hours, the manufacturing overhead for Job # 971 is:

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 2E: Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted...

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Direct labor hours are estimated as 2,000 in Quarter 1; 2,100 in Quarter 2; 1,900 in Quarter 3; and 2,300 in Quarter 4. Prepare a manufacturing overhead budget using the information provided.
A company estimates its manufacturing overhead will be $750,000 for the next year. What is the predetermined overhead rate given the following independent allocation bases? Budgeted direct labor hours: 60,000 Budgeted direct labor expense: $1,500,000 Estimated machine hours: 100,000
Baxter Company has two processing departments: Assembly and Finishing. A predetermined overhead rate of 10 per DLH is used to assign overhead to production. The company experienced the following operating activity for April: a. Materials issued to Assembly, 24,000 b. Direct labor cost: Assembly, 500 hours at 9.20 per hour; Finishing, 400 hours at 8 per hour c. Overhead applied to production d. Goods transferred to Finishing, 32,500 e. Goods transferred to finished goods warehouse, 20,500 f. Actual overhead incurred, 10,000 Required: 1. Prepare the required journal entries for the preceding transactions. 2. Assuming Assembly and Finishing have no beginning work-in-process inventories, determine the cost of each departments ending work-in-process inventories.
Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of 168,000 for next year. Service Department 2 has total budgeted costs of 280,000 for next year. Minor allocates service department costs solely to the producing departments. Service Department 1 cost is allocated to producing departments on the basis of machine hours. Service Department 2 cost is allocated to producing departments on the basis of direct labor hours. Producing Department 1 has budgeted 8,000 machine hours and 12,000 direct labor hours. Producing Department 2 has budgeted 2,000 machine hours and 12,000 direct labor hours. What is the total cost allocation from the two service departments to Producing Department 1? a. 173,600 b. 140,000 c. 134,400 d. 274,400
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Professional labor cost budget Based on the data in Exercise 13-5 and assuming that the average compensation per hour for staff is $36 and for partners is $300. prepare a professional labor cost budget for Day & Spieth, CPAs, for the year ending March 31. 20Y6. Use the following column headings:
Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of direct labor and direct materials per unit for the year are as follows: The standard price paid per pound of direct materials is 1.60. The standard rate for labor is 8.00. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is as follows: The company expects to work 12,000 direct labor hours during the year; standard overhead rates are computed using this activity level. For every small stapler produced, the company produces two regular staplers. Actual operating data for the year are as follows: a. Units produced: small staplers, 35,000; regular staplers, 70,000. b. Direct materials purchased and used: 56,000 pounds at 1.5513,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending direct materials inventories. c. Direct labor: 14,800 hours3,600 hours for the small stapler and 11,200 hours for the regular stapler. Total cost of direct labor: 114,700. d. Variable overhead: 607,500. e. Fixed overhead: 350,000. Required: 1. Prepare a standard cost sheet showing the unit cost for each product. 2. Compute the direct materials price and usage variances for each product. Prepare journal entries to record direct materials activity. 3. Compute the direct labor rate and efficiency variances for each product. Prepare journal entries to record direct labor activity. 4. Compute the variances for fixed and variable overhead. Prepare journal entries to record overhead activity. All variances are closed to Cost of Goods Sold. 5. Assume that you know only the total direct materials used for both products and the total direct labor hours used for both products. Can you compute the total direct materials and direct labor usage variances? Explain.
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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.)
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