Job 206 Item: 50 backhoe buckets Direct Materials Direct Materials Price Materials: Quantity 105 Amount Steel (tons) $1,200 $126,000 Steel components (pieces) 630 4,410 Total materials $130,410 Direct Labor Rate Direct Labor Hours Direct labor: Amount $ 9,000 Foundry Welding $22.50 400 550 27.00 14,850 Shipping 3,240 180 18.00 $ 27,090 Total direct labor 1,130 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead (200% of direct labor dollars) $ 54,180 $ 211,680 200% $27,090 Total cost Total units 50 Unit cost (rounded) $4,233.60 (Continued) Job 228 Item: 75 backhoe buckets Direct Matertals Quantity Direct Materlals Price Amount Materials: Steel (tons) $1,100 $214,500 195 Steel components (pieces) Total materials 945 6,615 $221,115 Direct Labor Direct Labor Rate Amount Hours Direct labor: $ 16,875 Foundry $22.50 750 Welding 28,350 1,050 27.00 Shipping 375 18.00 6,750 $ 51,975 Total direct labor 2,175 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead $ 103950 $ 377,040 (200% of direct labor dollars) $51,975 200% Total cost Total units 75 Unit cost $5,027.20 Management is concerned with the increase in unit costs over the months from October to December. To understand what has occurred, management interviewed the purchasing manager and quality manager. Purchasing Manager: Prices have been holding steady for our raw materlals during the first half of the year.I found a new suppler for our bulk steel that was willing to offer a better price than we recelved In the past. I saw these lower steel prices and Jumped at them, knowing that a reduction In steel prices would have a very favorable Impact on our costs. Quality Manager: Something happened around mid-year. All of a sudden, we were experlencing problems with respect to the quallty of our steel. As a result, we've been having all sorts of problems on the shop floor In our foundry and welding operation. 1. Analyze the two job cost sheets and identify why the unit costs have changed for the backhoe buckets. Complete the following schedule to help in your analysis: Input Quantity per Unit-Job 228 Input Quantity per Unit-Job 206 Item Steel Foundry labor Welding labor -How would you interpret what has happened in light of your analysis and 2. the interviews?
Job 206 Item: 50 backhoe buckets Direct Materials Direct Materials Price Materials: Quantity 105 Amount Steel (tons) $1,200 $126,000 Steel components (pieces) 630 4,410 Total materials $130,410 Direct Labor Rate Direct Labor Hours Direct labor: Amount $ 9,000 Foundry Welding $22.50 400 550 27.00 14,850 Shipping 3,240 180 18.00 $ 27,090 Total direct labor 1,130 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead (200% of direct labor dollars) $ 54,180 $ 211,680 200% $27,090 Total cost Total units 50 Unit cost (rounded) $4,233.60 (Continued) Job 228 Item: 75 backhoe buckets Direct Matertals Quantity Direct Materlals Price Amount Materials: Steel (tons) $1,100 $214,500 195 Steel components (pieces) Total materials 945 6,615 $221,115 Direct Labor Direct Labor Rate Amount Hours Direct labor: $ 16,875 Foundry $22.50 750 Welding 28,350 1,050 27.00 Shipping 375 18.00 6,750 $ 51,975 Total direct labor 2,175 Direct Total Labor Cost Factory Overhead Rate Amount Factory overhead $ 103950 $ 377,040 (200% of direct labor dollars) $51,975 200% Total cost Total units 75 Unit cost $5,027.20 Management is concerned with the increase in unit costs over the months from October to December. To understand what has occurred, management interviewed the purchasing manager and quality manager. Purchasing Manager: Prices have been holding steady for our raw materlals during the first half of the year.I found a new suppler for our bulk steel that was willing to offer a better price than we recelved In the past. I saw these lower steel prices and Jumped at them, knowing that a reduction In steel prices would have a very favorable Impact on our costs. Quality Manager: Something happened around mid-year. All of a sudden, we were experlencing problems with respect to the quallty of our steel. As a result, we've been having all sorts of problems on the shop floor In our foundry and welding operation. 1. Analyze the two job cost sheets and identify why the unit costs have changed for the backhoe buckets. Complete the following schedule to help in your analysis: Input Quantity per Unit-Job 228 Input Quantity per Unit-Job 206 Item Steel Foundry labor Welding labor -How would you interpret what has happened in light of your analysis and 2. the interviews?
Chapter5: Process Costing
Section: Chapter Questions
Problem 10MC: Direct material costs $3 per unit, direct labor costs $5 per unit, and overhead is applied at the...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
RIRA Company makes attachments such as backhoes and grader and bulldozer blades for construction equipment. The company uses a job order cost system. Management is concerned about cost performance and evaluates the
Transcribed Image Text:Job 206
Item: 50 backhoe buckets
Direct Materials
Direct Materials
Price
Materials:
Quantity
105
Amount
Steel (tons)
$1,200
$126,000
Steel components (pieces)
630
4,410
Total materials
$130,410
Direct
Labor Rate
Direct Labor
Hours
Direct labor:
Amount
$ 9,000
Foundry
Welding
$22.50
400
550
27.00
14,850
Shipping
3,240
180
18.00
$ 27,090
Total direct labor
1,130
Direct Total
Labor
Cost
Factory
Overhead
Rate
Amount
Factory overhead
(200% of direct labor dollars)
$ 54,180
$ 211,680
200%
$27,090
Total cost
Total units
50
Unit cost (rounded)
$4,233.60
(Continued)
Transcribed Image Text:Job 228
Item: 75 backhoe buckets
Direct Matertals
Quantity
Direct Materlals
Price
Amount
Materials:
Steel (tons)
$1,100
$214,500
195
Steel components (pieces)
Total materials
945
6,615
$221,115
Direct Labor
Direct
Labor Rate
Amount
Hours
Direct labor:
$ 16,875
Foundry
$22.50
750
Welding
28,350
1,050
27.00
Shipping
375
18.00
6,750
$ 51,975
Total direct labor
2,175
Direct Total
Labor
Cost
Factory
Overhead
Rate
Amount
Factory overhead
$ 103950
$ 377,040
(200% of direct labor dollars)
$51,975
200%
Total cost
Total units
75
Unit cost
$5,027.20
Management is concerned with the increase in unit costs over the months from October
to December. To understand what has occurred, management interviewed the purchasing
manager and quality manager.
Purchasing Manager: Prices have been holding steady for our raw materlals during the first half of the year.I
found a new suppler for our bulk steel that was willing to offer a better price than we recelved In the past. I saw
these lower steel prices and Jumped at them, knowing that a reduction In steel prices would have a very
favorable Impact on our costs.
Quality Manager: Something happened around mid-year. All of a sudden, we were experlencing problems
with respect to the quallty of our steel. As a result, we've been having all sorts of problems on the shop
floor In our foundry and welding operation.
1. Analyze the two job cost sheets and identify why the unit costs have changed for the
backhoe buckets. Complete the following schedule to help in your analysis:
Input Quantity per
Unit-Job 228
Input Quantity per
Unit-Job 206
Item
Steel
Foundry labor
Welding labor
-How would you interpret what has happened in light of your analysis and
2.
the interviews?
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