FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a
The results of a recent month’s operations appear below:
Sales $ 43,710
Beginning inventories $ 0
Ending inventories $ 0
Direct materials $ 5,380
Direct labor $ 8,860
Manufacturing overhead incurred $ 14,260
Selling and administrative expense $ 8,180
Actual hours of bandsaw use 154
Required:
1-a. Prepare an income statement that records the cost of unused capacity on the income statement as a period expense.
1-b. How much of the cost of unused capacity can be shown on the income statement as a period expense
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- Rundle Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Labor Cost $ 1,310 1,200 Laptop keyboards Desktop keyboards Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Material Number of Number of Cost $ 6,300 7,600 Cost Per Unit Setups 29 13 Parts 49 26 Allocation Rate 3% of material cost $102.00 per setup $3.00 per part $ 1.60 per minute $9.00 per order Inspection Time 7,400 minutes 4,800 minutes a. Compute the cost per unit of laptop and desktop keyboards, assuming that Rundle made…arrow_forwardSydney Anime Apparel (SAA) manufacturers graphic t-shirts depicting popular anime characters. SAA uses a traditional plant-wide POHR to allocate their manufacturing costs to products. They estimated a total cost of $606,000. They identified direct labor hours as the cost driver. For the current year, they estimated a total of 80,800 direct labor hours, and actually incurred 76,200 in the production of their t-shirts. What is the applied manufacturing overhead costs? Give your answer to the nearest whole dollar.arrow_forwardSolomon Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Activities Unit Level Batch Level Product Level Facility Level Cost $ 78, 300 $ 28,910 $ 15,000 $ 180,000 Cost driver 2,700 labor hours 49 setups Percentage of use 18,000 units Production of 730 sets of cutting shears, one of the company's 20 products, took 180 labor hours and 5 setups and consumed 16 percent of the product - sustaining activities. Required Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? How much overhead is allocated to the cutting shears using activity-based costing? Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 730 units…arrow_forward
- COVID Co. uses a 5,000 square foot factory space that it rents for $2,500 a month for all its manufacturing activities. Production manager has decided to switch to an activity-based costing system, and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality Control. 600 square feet of the factory are used for machining, while 2,000 square feet (each) are used for Preparation and Setup and Quality Control. Finishing uses 400 square feet. When assigning indirect costs to each activity, how much factory rent should be assigned to the Machining cost pool? Select one: a. $2,000 Ob. $200 Oc. $300 d. $1,000 O e. None of the given ANSWER Next page Questions video Jump to... Table- web and Windows Warrow_forwardIsaacson's Fine Furnishings manufactures upscale custom furniture. Isaacson's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,170,000 of manufacturing overhead to individual jobs. However, Delores Johnson, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $735,000 of manufacturing overhead while the Finishing Department incurs $435,000 of manufacturing overhead. Johnson has identified machine hours (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor (DL) hours as the primary cost driver in the Finishing Department The Isaacson's plant completed Jobs 450 and 455 on May 15. Both jobs incurred a total of 7 DL hours throughout the entire production process. Job 450 incurred 1 MH in the Machining Department and 6 DL hours in the Finishing Department (the other DL hour occurred in the Machining…arrow_forwardTie-dye Lights makes two products: Party and Holiday. It takes 80,900 direct labor hours to manufacture the Party Line and 93,500 direct labor hours to manufacture the Holiday Line. Overhead consists of P225,000 in the machine setup cost pool and P149,960 in the packaging cost pool. The machine setup pool has 52,000 setups for the Party product and 98,000 setups for the Holiday product. The packaging cost pool has 26,000 parts in the Party product and 39,200 parts for the Holiday product. Using the traditional cost method of direct labor hours, what is the predetermined overhead rate?arrow_forward
- Haresharrow_forwardDrippin' in Heat manufactures the finest formal wear west of the Mississippi. The company produces two main products: Suit Jackets and Sport Coats. Currently the company uses a traditional overhead rate in which Manufacturing Overhead is allocated to products based on direct labor hours logged. The projected production levels for the period are 1,200 Suit Jackets and 400 Sport Coats. Due to profitability concerns, management is considering switching to Activity-Based Costing (ABC). Management has divided manufacturing overhead costs into three activities and cost pools: Assembly $30,000; Machine Setup $20,000; and Product Movement $102,400. Management has identified the following cost drivers for each overhead activity: direct labor hours for assembly, number of setups for machine setup, and number of moves for product movement. The following information has been compiled for each product line: Direct Labor Requirements Machine Setup Requirements Product Movement Requirements Suit…arrow_forwardMarvel Parts, Incorporated, manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 2,850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 42,560 $ 22.40 Direct labor $ 51,300 27.00 Variable manufacturing overhead (based on direct labor-hours) $ 6,840 3.60 $ 53.00 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (12,000 yards) $ 45,600 $ 22.80 Direct labor $ 49,000 24.50 Variable manufacturing overhead $ 7,000 3.50 $ 50.80 At standard, each set of covers…arrow_forward
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