Safari Company produces customized rowboats. The company uses a job order costing system. Its plant has twoproduction departments: cutting and machining.The departments have direct material and direct labor costs, in addition to overhead costs.The estimated manufacturing overhead cost and direct labor cost for each department for follow:Cutting$400,000$300,000TotalMachining$900,000$1,300,000$500,000Manufacturing Overhead costDirect labor cost$200,000Direct Labor hours5,00012,000Machine Hours10,00030,000Assume that separate, departmental predetermined manufacturing cost driver rates based on direct labor costs forCutting, and machine hours for Machining, (separately).Determine the separate departmental manufacturing cost driver rates and manufacturing overhead costs applied to theDuluth job.The company received an invitation from Simpson rowing Company to bid on an order of fifty luxury rowboats. ThisSimpson Job would require direct manufacturing costs in the two departments as follows:Using the Cost Driver rate determined above allocate overhead to the departments and determine the cost of the job.Cutting$12,000Machining$800$2,000Total$12,800$9,000Direct material costDirect labor cost$7,000Direct labor hours5030Machine Hours10100МОН АppliedTotal Cost

Name: Safari Company produces customized rowboats. The company uses a job o
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Description: Safari Company produces customized rowboats. The company uses a job order costing system. Its plant has twoproduction departments: cutting and machining.The departments have direct material and direct labor costs, in addition to overhead costs.The e

Safari company produces customized row boats. It follows job order costing system. It operates two…

Business

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Using the Cost Driver rate determined above allocate overhead to the departments and determine the cost of the job. Cutting $12,000 $7,000 Machining $800 $2,000 Total $12,800 $9,000 Direct material cost Direct labor cost Direct labor hours 50 30 Machine Hours 10 100 МОН Аpplied Total Cost

Using the Cost Driver rate determined above allocate overhead to the departments and determine the cost of the job. Cutting $12,000 $7,000 Machining $800 $2,000 Total $12,800 $9,000 Direct material cost Direct labor cost Direct labor hours 50 30 Machine Hours 10 100 МОН Аpplied Total Cost

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter18: Activity-based Costing

Section: Chapter Questions

Problem 2PA: The management of Gwinnett County Chrome Company, described in Problem 1A, now plans to use the...

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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?
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