1.
Concept introduction:
Predetermined overhead rate: Pre-determined overhead rate refers to that calculation where budgeted overhead costs is being divided by budgeted or estimated level of activity and that activity could be direct material cost, direct labor cost, labor hours, etc.
The predetermined overhead rate using grooming hours.
2.
Concept introduction:
Predetermined overhead rate: Pre-determined overhead rate refers to that calculation where budgeted overhead costs is being divided by budgeted or estimated level of activity and that activity could be direct material cost, direct labor cost, labor hours, etc.
The Total cost for grooming three large dogs when total direct labor hours is 12 hours.
3.
Concept introduction:
Predetermined overhead rate: Pre-determined overhead rate refers to that calculation where budgeted overhead costs is being divided by budgeted or estimated level of activity and that activity could be direct material cost, direct labor cost, labor hours, etc.
The price to be quoted to the job in part 2 when the markup is 25% of the total cost.
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- Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Required: 1. Calculate the prime cost per cleaning. 2. Calculate the conversion cost per cleaning. 3. Calculate the total variable cost per cleaning. 4. Calculate the total service cost per cleaning. 5. What if rent on the office that Jean and Tom use to run HHH increased by 1,500? Explain the impact on the following: a. Prime cost per cleaning b. Conversion cost per cleaning c. Total variable cost per cleaning d. Total service cost per cleaningarrow_forwardVentana Window and Wall Treatments Company provides draperies, shades, and various window treatments. Ventana works with the customer to design the appropriate window treatment, places the order, and installs the finished product. Direct materials and direct labor costs are easy to trace to the jobs. Ventanas income statement for last year is as follows: Ventana wants to find a markup on cost of goods sold that will allow them to earn about the same amount of profit on each job as was earned last year. Required: 1. What is the markup on cost of goods sold (COGS) that will maintain the same profit as last year? (Round the percentage to two significant digits.) 2. A customer orders draperies and shades for a remodeling job. The job will have the following costs: What is the price that Ventana will quote given the markup percentage calculated in Requirement 1? (Round the price to the nearest dollar.) 3. What if Ventana wants to calculate a markup on direct materials cost, since it is the largest cost of doing business? What is the markup on direct materials cost that will maintain the same profit as last year? (Round the percentage to two significant digits.) What is the bid price Ventana will use for the job given in Requirement 2 if the markup percentage is calculated on the basis of direct materials cost? (Round to the nearest dollar.)arrow_forwardYour company uses an activity-based costing system for its overhead costs. The following data is from its activity-based costing system. Activity Rates Cleaning $ 7.58 per hour Job support $20.74 per job Client support $25 per client One particular client requested 25 jobs during the year that required a total of 150 hours. For this service, the client was charged $2,000. What is customer margin for this client? (Round to the nearest dollar.) $ 345 $1,681 $1,656 $ 320arrow_forward
- Angler Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Direct labor hours Machine hours Overhead costs Multiple Choice O $15.60. O Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 3.4 machine hours in the Assembly Department, and 4.0 direct labor hours and 0.6 machine hours in the Finishing Department? $3.40 Assembly 190,000 DLH 390,000 MH $16.10. $ 390,000 Finishing) 149,000 DLH: 95,550 MH $ 581,100arrow_forwardHaywood Printing is processing a job with the following activity rates: Activity Cost Driver Driver Rate Direct labor Number of hours $8 Copying Number of copies $0.05 If this job requires 5 hours for 1,000 copies, what is the activity-based cost of the job?arrow_forwardPreparing and using a job cost record to prepare journal entries Ki Technology Co. manufactures DVDs for computer software and entertainment companies. Ki uses job order costing. On April 2, Ki began production of 6,000 DVDs, Job 423, for Paradigm Pictures for $1.20 sales price per DVD. Ki promised to deliver the DVDs to Paradigm Pictures by April 5. Ki incurred the following direct costs: Ki Technology allocates manufacturing overhead to jobs based on the relation between estimated overhead of $574,000 and estimated direct labor costs of job 423 was completed and shipped on April 3. Requirements Prepare a job cost record for job 423. Calculate the predetermined overhead allocation rate (round to two decimal places); then allocate manufacturing overhead to the job. Journalize in summary form the requisition of direct materials and the assignment of direct labor and the allocation of manufacturing overhead to job 423. Wages are not yet paid. Journalize completion of the job and the…arrow_forward
- Job costing and pricingAttorney Maria Conroe uses a job order costing system to collect costs of client engagements. Conroe is currently working on a case for Stacie Olivgra. During the first three months of the year, Conroe logged 209 hours on the Olivgra case.In addition to direct hours spent by Conroe, her office assistant has worked 35 hours typing and copying 3,190 pages of documents related to the Olivgra case. Conroe’s assistant works 160 hours per month and is paid a salary of $10,560 per month. The average cost per copy is $0.06 for paper, toner, and machine rental. Telephone and fax charges for long-distance calls on the case totaled $319. Last, Conroe has estimated that total office overhead for rent, utilities, parking, and so on amount to $21,120 per month and that, during a normal month, the office is open every hour that the assistant is at work. Overhead charges are allocated to clients based on the number of hours of assistant’s time. a. Conroe desires to set the…arrow_forward4. Janet sells custom made window blinds. If her raw materials are $15, labor costs are $125, and overhead is 50% of labor, using job order costing calculate the cost for producing the custom blinds. a.$140 b. $202.50 c. $265 d. $187.50arrow_forwardTest yourself ABC Company is producing three products, A, B and C in Direct labor hours their unit. A В C 10,000 15,000 25,000 Number of orders 15 25 10 placed During the year 2019,the total overhead expenses Machine set up hours 150 300 50 are; Requirement 1. Calculated pre-determined overhead rate if overhead is applied based on the direct labor hours .Compute overhead rates using activity based costing. Determine the difference in the amount of overhead allocated to each Procurement cost RO200,000 Machine set up cost RO100,000 product between the two methods.arrow_forward
- Overhead Assignment: Actual and Normal Activity ComparedReynolds Printing Company specializes in wedding announcements. Reynolds uses an actualjob-order costing system. An actual overhead rate is calculated at the end of each month usingactual direct labor hours and overhead for the month. Once the actual cost of a job is determined, the customer is billed at actual cost plus 50%.During April, Mrs. Lucky, a good friend of owner Jane Reynolds, ordered three sets ofwedding announcements to be delivered May 10, June 10, and July 10, respectively. Reynoldsscheduled production for each order on May 7, June 7, and July 7, respectively. The orders wereassigned job numbers 115, 116, and 117, respectively.Reynolds assured Mrs. Lucky that she would attend each of her daughters’ weddings. Outof sympathy and friendship, she also offered a lower price. Instead of cost plus 50%, she gave hera special price of cost plus 25%. Additionally, she agreed to wait until the final wedding to billfor the…arrow_forwardLising Therapy has a physical therapist who performs electro-mechanical treatments for its patients. During April, Lising had the following cost and output information: Required: 1. Calculate the cost per treatment for April. 2. Calculate the cost of services sold for April. 3. What if Lising found a way to reduce overhead costs by 20 percent? How would this affect the profit per treatment?arrow_forwardJean and Tom Perritz own and manage Happy Home Helpers. Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings: Next year, HHH expects to purchase 25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows: There is no work-in-process inventory and no finished goods inventory; in other words, a cleaning is started and completed on the same day. Required: 1. Prepare a statement of cost of services sold in good form. 2. How does this cost of services sold statement differ from the cost of goods sold statement for a manufacturing firm?arrow_forward
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