ACCESS IN BB-ACC202
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ISBN: 9780135375587
Author: Pearson
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem 3.24AE
Compare bid prices under two different allocation bases (Learning Objectives 3 & 4)
Olney Recycling recycles newsprint, cardboard, and so forth, into recycled packaging materials. For the coming year, Olney estimates total manufacturing overhead to be $370,000. The company’s managers are not sure if direct labor hours (estimated to be 10,000) or machine hours (estimated to be 14,800 hours) is the best allocation base to use for allocating manufacturing overhead. Olney bids for jobs using a 31% markup over total
After the new fiscal year began, Leftwich Paper Supply asked Olney Recycling to bid for a job that will take 2,020 machine hours and 1,650 direct labor hours to produce. The direct labor cost for this job will be $11 per hour, and the direct materials will total $25,400.
Requirements
- 1. Compute the total
job cost and bid price if Olney Recycling decided to use direct labor hours as the manufacturing overhead allocation base for the year. - 2. Compute the total job cost and bid price if Olney Recycling decided to use machine hours as the manufacturing overhead allocation base for the year.
- 3. In addition to the bid from Olney Recycling, Leftwich Paper Supply received a bid of $126,000 for this job from Drund Recycling. What are the ramifications for Olney Recycling?
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MANAGEMENT ACCOUNTING & CONTROL
STANDARD COSTS AND VARIANCE ANALYSIS
LEARNING ACTIVITY 1
Torres Company has established standard costs for the cabinet department, in which one size of MX cabinet is made. The standard costs of producing one of these MX cabinets are shown below:
Standard Cost Card – MX Cabinet
Direct Material: Lumber 50 board ft at P 4
200
Direct Labor: 8 hours at P 10
80
Overhead Costs: Variable – 8 hrs at P5
40
Fixed – 8 hrs at P3
24
Total Standard Unit Cost
344
During June 2018, 500 of these cabinets were produced. The cost of operations during the month are shown below. There is no work in process at the beginning and end of the month.
Direct material purchased: 30,000 bf at P4.10
123,000
Direct materials used: 24,000 board ft
Direct labor: 4,200 hrs at P9.50
39,900
Overhead Costs : Variable Costs
22,000
Fixed Costs
11,000…
Triad Children's Center (TCC), a non-profit organization, uses relevant cost analysis to determine whether new services are desirable. TCC is looking at adding a new educational program for grade school children who are having difficulty with their reading and math skills. The following relevant costs are expected if the program is accepted:
Costs (per year)
Program Director salary
$
39,000
Part-time Assistants
$
28,000
Variable cost per child
$
900
TCC estimates that a maximum of 40 children will participate in this program in the first year. If TCC decides to implement this program, funding will be received from the City Chamber of Commerce ($50,000) and a local Private University Endowment Fund ($35,000).
Calculate the expected surplus or deficit from operations given the above information.
Chapter 3 Solutions
ACCESS IN BB-ACC202
Ch. 3 - (Learning Objective 1) For which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 3) The amount of manufacturing...Ch. 3 - (Learning Objective 4) Which of the following is...Ch. 3 - (Learning Objective 5) Which of the following is...Ch. 3 - (Learning Objective 5) Assuming the amount of...Ch. 3 - Prob. 8QCCh. 3 - Prob. 9QCCh. 3 - Prob. 10QC
Ch. 3 - Identify product costs, period costs, and product...Ch. 3 - Decide on product costing system (Learning...Ch. 3 - Determine the flow of costs between inventory...Ch. 3 - Understanding key document terms in a job cost...Ch. 3 - Compute a professional billing rate (Learning...Ch. 3 - Prob. 3.6SECh. 3 - Continuation of S3-6: compute total allocated...Ch. 3 - Continuation of S3-7: determine over- or under...Ch. 3 - Prob. 3.9SECh. 3 - Calculate job cost and billing at appliance repair...Ch. 3 - Calculating overallocated or underallocated...Ch. 3 - Prob. 3.12SECh. 3 - Record manufacturing labor costs (Learning...Ch. 3 - Prob. 3.14SECh. 3 - Prob. 3.15SECh. 3 - Understanding key terms (Learning Objectives 1, 2,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Prob. 3.18AECh. 3 - Determine the cost of a job and use it for pricing...Ch. 3 - Compute a predetermined overhead rate and...Ch. 3 - Prob. 3.21AECh. 3 - Prob. 3.22AECh. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Job cost and bid price at a consulting firm...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Understand the flow of costs in a job cost shop...Ch. 3 - Prob. 3.33BECh. 3 - Prob. 3.34BECh. 3 - Prob. 3.35BECh. 3 - Sustainability and job costing (Learning...Ch. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Prob. 3.43BECh. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Job costing or process costing for wedding...Ch. 3 - Discussion Questions 1. Why would it be...Ch. 3 - Unwrapped or How Its Made Go to www.YouTube.com...Ch. 3 - Ethics involved with choice of cost driver...Ch. 3 - Prob. 3.61ACTCh. 3 - Issues with cost of job (Learning Objectives 2, 3,...
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