Managerial Accounting (Custom)
4th Edition
ISBN: 9781269916721
Author: Braun
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem 3.60ACT
Issues with cost of job (Learning Objectives 2, 3, & 4)
Custom Cookies produces gourmet cookies with company logos for special promotions. The cookies are customized with the customer’s choice of shape, color, flavor, and decorations. Custom Cookies uses a
| Direct materials (flour, sugar, butter, eggs, baking soda, vanilla) | $1.50 |
| Direct labor (shape and decorate cookies) | 0.50 |
| Manufacturing overhead | 0.90 |
| Total |
$2.90 |
In September, Chesrown Motor Group ordered 400 dozen cookies to present to its clients as holiday gifts. Delivery of the cookies to Chesrown would occur in early December. At the time of Chesrown Motor Group’s order, the selling price per dozen cookies was $7.25.
Chesrown Motor Group placed an order for an additional 100 dozen cookies in November, to be delivered with the original order of 400 dozen. However, since that original order, two events occurred that increased the cost of the cookies. First, the price of sugar skyrocketed due to bad weather in Brazil and India, two of the largest sugar suppliers in the world. Second, a new local cookie bakery is about to open in time for the holiday season and is aggressively trying to hire the cookie decorators from Custom Cookies. In response, Custom Cookies increased the hourly rate of the employees who decorate the cookies to keep those workers from going to work for the competition. All other costs at Custom Cookies have remained the same.
Because of these two events, Custom Cookies recalculated the cost of a dozen cookies as follows:
| Direct materials (flour, sugar, butter, eggs, baking soda, vanilla) | $1.60 |
| Direct labor (shape and decorate cookies) | 0.65 |
| Manufacturing overhead | 1.17 |
| Total manufacturing cost per dozen cookies | $3.42 |
Requirements
- A. Do you agree with the cost analysis for the second order? Explain your answer.
- B. Should the two orders be accounted for as one job or as two jobs in Custom Cookies’ system?
- C. What sales price per box should Custom Cookies set for the second order? Explain why you have selected this per-box price. What are the advantages and disadvantages of this price?
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Click to watch the Tell Me More Learning Objective 1 video and then answer the questions below.
1. Which of the following manufacturers is most likely to use a process cost system?
Purse manufacturer
Sports drink manufacturer
Automobile manufacturer
Guitar manufacturer
2. Process and job order cost systems are similar in that both systems _______.
record and summarize product costs
classify product costs as direct materials, direct labor, and factory overhead
allocate factory overhead costs to products
All of these choices are correct.
Classify costs and make a quality-initiative decision (Learning Objective 5) Sinclair Corp. manufactures radiation-shielding glass panels . Suppose Sinclair is consider-ing spending the following amounts on a new TOM program :Strength-testing one item from each batch of panels ......................... . Training employees in TOM ................................................................. . Training suppliers in TOM .................................................................... . Identifying preferred suppliers that commit to on-time delivery ofperfect quality materials ................................................................... .Sinclair expects the new program to save costs through the following:Avoid lost profits from lost sales due to disappointed customers ....... Avoid rework and spoilage ................................................................. .. Avoid inspection of raw materials ........................................................ . Avoid…
I have the following information: direct materials $250 and total manufacturing cost $700. Overhead applied to jobs at a rate of 200% of direct labor cost. This is for Chapter 2 job costing in managerial accounting. I am supposed to figure out conversion cost, direct labor cost, and manufacturing overhead.
I know the formula for conversion cost= direct labor + manufacturing OH
Prime cost= direct labor + direct materials
How do I figure out direct labor cost with the given information? The learning objective states calcualte predetermined overhead rate, but I do not have estimated manufacturing cost and estimated labor. Can you please help?
Thanks,
Erica Gordon
Chapter 3 Solutions
Managerial Accounting (Custom)
Ch. 3 - Prob. 1QCCh. 3 - 2. (Learning Objective 2) Which of the following...Ch. 3 - 3. (Learning Objective 2) Which of the following...Ch. 3 - 4. (Learning Objective 3) The amount of...Ch. 3 - 5. (Learning Objective 4) Which of the following...Ch. 3 - (Learning Objective 5) Which of the following is...Ch. 3 - 7. (Learning Objective 5) Assuming the amount of...Ch. 3 - 8. (Learning Objective 6) Whenever direct...Ch. 3 - 9. (Learning Objective 6) When a job is completed,...Ch. 3 - 10. (Learning Objective 7, Appendix) Which of the...
Ch. 3 - S3-1 Decide on product costing system (Learning...Ch. 3 - S3-2 Determine the flow of costs between inventory...Ch. 3 - S3-3 Understanding key document terms in a job...Ch. 3 - S3-4 Compute a professional billing rate (Learning...Ch. 3 - Prob. 3.5SECh. 3 - S3-6 Continuation of S3-5: compute total allocated...Ch. 3 - S3-7 Continuation of S3-6: determine over- or...Ch. 3 - Prob. 3.8SECh. 3 - S3-9 Calculate job cost and billing at appliance...Ch. 3 - S3-10 Ramifications of overallocating and...Ch. 3 - S3-11 Record purchase and use of materials...Ch. 3 - S3-12 Record manufacturing labor costs (Learning...Ch. 3 - S3-13 Recompute job cost at a legal firm (Learning...Ch. 3 - Prob. 3.14SECh. 3 - S3-1 5 Understanding key terms (Learning...Ch. 3 - E3-1 6A Identify type of costing system (Learning...Ch. 3 - E3-17 A Understand the flow of costs in a job cost...Ch. 3 - Prob. 3.20AECh. 3 - E3-18A Compute a predetermined overhead rate and...Ch. 3 - E3-19A Compute a predetermined overhead rate and...Ch. 3 - E3-21A Sustainability and job costing (Learning...Ch. 3 - E3-22A Determine the cost of a job (Learning...Ch. 3 - Prob. 3.23AECh. 3 - E3-24A Analyze manufacturing overhead (Learning...Ch. 3 - E3-25A Record manufacturing overhead (Learning...Ch. 3 - E3-26A Record journal entries (Learning Objectives...Ch. 3 - E3-27 A Analyze T-accounts (Learning Objectives 2,...Ch. 3 - Prob. 3.28AECh. 3 - Prob. 3.29AECh. 3 - E3-30B Identify type of costing system (Learning...Ch. 3 - E3-31 B Understand the flow of costs in a job cost...Ch. 3 - Prob. 3.34BECh. 3 - Prob. 3.32BECh. 3 - Prob. 3.33BECh. 3 - Prob. 3.35BECh. 3 - E3-36B Determine the cost of a job (Learning...Ch. 3 - Prob. 3.37BECh. 3 - Prob. 3.38BECh. 3 - Prob. 3.39BECh. 3 - E3-40B Record journal entries (Learning Objectives...Ch. 3 - Prob. 3.41BECh. 3 - Prob. 3.42BECh. 3 - Prob. 3.43BECh. 3 - P3-44A Analyze Manufacturing Overhead (Learning...Ch. 3 - P3-45A Use job costing at an advertising agency...Ch. 3 - Prob. 3.46APCh. 3 - Prob. 3.47APCh. 3 - P3- 48A Determine and record job costs (Learning...Ch. 3 - Prob. 3.49APCh. 3 - Prob. 3.50BPCh. 3 - Prob. 3.51BPCh. 3 - Prob. 3.52BPCh. 3 - P3-53B Prepare job cost record (Learning...Ch. 3 - Prob. 3.54BPCh. 3 - Prob. 3.55BPCh. 3 - Discussion Questions 1. Why would it be...Ch. 3 - Unwrapped or How Its Made Go to www.YouTube.com...Ch. 3 - A3-58 Ethics involved with choice of cost driver...Ch. 3 - Prob. 3.59ACTCh. 3 - Issues with cost of job (Learning Objectives 2, 3,...
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