Wanda Instrumentation produces navigational equipment for ships, aircraft (both staffed and drones), and land vehicles. The parts are produced to specification by their customers. Depending on the customer and the type of job, the customer pays according to the terms of either a "fixed-price" contract (the price does not depend directly on the cost of the job) or of a "cost-plus" contract (the price is equal to recorded cost plus a fixed fee). Wanda expects only two clients (Ivanhoe Aviation and Rolf's Shipyard) in Year 2. The work done for Ivanhoe will all be done under cost-plus contracts while the work done for Rolf's will all be done under fixed-price contracts. Selected budget data for Year 2 include the following: Direct labor cost ($000) Direct materials cost ($000) Manufacturing overhead ($000) Ivanhoe Aviation $ 660 1,980 Required A Rolf's Shipyard Unassigned $ 2,340 1,620 Required: a. Compute the predetermined rate assuming that Wanda Instrumentation uses direct labor costs to apply overhead. b. Compute the predetermined rate assuming that Wanda Instrumentation uses direct materials cost to apply overhead. Required B $ 6,480 Complete this question by entering your answers in the tabs below. Compute the predetermined rate assuming that Wanda Instrumentation uses direct materials cost to apply overhead. Application rate 2% of direct materials cost
Wanda Instrumentation produces navigational equipment for ships, aircraft (both staffed and drones), and land vehicles. The parts are produced to specification by their customers. Depending on the customer and the type of job, the customer pays according to the terms of either a "fixed-price" contract (the price does not depend directly on the cost of the job) or of a "cost-plus" contract (the price is equal to recorded cost plus a fixed fee). Wanda expects only two clients (Ivanhoe Aviation and Rolf's Shipyard) in Year 2. The work done for Ivanhoe will all be done under cost-plus contracts while the work done for Rolf's will all be done under fixed-price contracts. Selected budget data for Year 2 include the following: Direct labor cost ($000) Direct materials cost ($000) Manufacturing overhead ($000) Ivanhoe Aviation $ 660 1,980 Required A Rolf's Shipyard Unassigned $ 2,340 1,620 Required: a. Compute the predetermined rate assuming that Wanda Instrumentation uses direct labor costs to apply overhead. b. Compute the predetermined rate assuming that Wanda Instrumentation uses direct materials cost to apply overhead. Required B $ 6,480 Complete this question by entering your answers in the tabs below. Compute the predetermined rate assuming that Wanda Instrumentation uses direct materials cost to apply overhead. Application rate 2% of direct materials cost
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 1TIF: Ethics in Action TAC Industries Inc. sells heavy equipment to large corporations and federal, state,...
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Transcribed Image Text:Wanda Instrumentation produces navigational equipment for ships, aircraft (both staffed and drones), and land vehicles. The parts are
produced to specification by their customers. Depending on the customer and the type of job, the customer pays according to the
terms of either a "fixed-price" contract (the price does not depend directly on the cost of the job) or of a "cost-plus" contract (the price
is equal to recorded cost plus a fixed fee). Wanda expects only two clients (Ivanhoe Aviation and Rolf's Shipyard) in Year 2. The work
done for Ivanhoe will all be done under cost-plus contracts while the work done for Rolf's will all be done under fixed-price contracts.
Selected budget data for Year 2 include the following:
Direct labor cost ($000)
Direct materials cost ($000)
Manufacturing overhead ($000)
Ivanhoe
Aviation
$ 660
1,980
Required A Required B
Required:
a. Compute the predetermined rate assuming that Wanda Instrumentation uses direct labor costs to apply overhead.
b. Compute the predetermined rate assuming that Wanda Instrumentation uses direct materials cost to apply overhead.
Rolf's
Shipyard Unassigned
$ 2,340
1,620
Complete this question by entering your answers in the tabs below.
Application rate
$ 6,480
Compute the predetermined rate assuming that Wanda Instrumentation uses direct materials cost to apply overhead.
2% of direct materials cost
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