Managerial Accounting for Managers
4th Edition
ISBN: 9781259578540
Author: Eric Noreen, Peter C. Brewer Professor, Ray H Garrison
Publisher: McGraw-Hill Education
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Chapter 4, Problem 4.13E
1)
To determine
To calculate:
Fixed manufacturing overhead cost per quarter
Variable manufacturing overhead cost per unit
Manufacturing overhead cost in 4 quarter
Total
Unit product cost in 4 quarter
2)
To determine
Overheads: These are those expenses which are not directly related to production of goods and service. Examples: telephone bills, legal fees, advertisement.Overheads cost exclude direct labour, direct material, direct expense
To explain: Effect when estimated unit product cost fluctuate from one quarter to next
3)
To determine
Overheads: These are those expenses which are not directly related to production of goods and service. Examples: telephone bills, legal fees, advertisement.Overheads cost exclude direct labour, direct material, and direct expense
Recommendation for stabilizing the company unit product cost
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Varying Plantwide Predetermined Overhead Rates
Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:
Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.
Required:
1. Assuming the estimated variable manufacturing overhead cost per unit is $2.00, what must be the estimated total fixed manufacturing overhead cost per quarter?
2. Assuming the assumptions about cost behavior from…
Choose the letter of answer:
Hilby, Inc., uses the high-low method to analyze cost behavior. The company observed that at 12,000 machine hours of activity, total maintenance costs averaged P7.00 per hour. When activity jumped to 15,000 machine hours, which was still within the relevant range, the average cost per machine hour totaled P6.40. On the basis of this information, the variable cost per machine hour was:
a. P4.00.b. P6.40.c. P6.70.d. P7.00.
Variable and Fixed Cost Behavior
Munchak Company’s relevant range of production is 9,000–11,000 units. Last month the company produced 10,000 units. Its total manufacturing cost per unit produced was $70. At this level of activity the company’s variable manufacturing costs are 40% of its total manufacturing costs.
Required:
Assume that next month Munchak produces 10,050 units and that its cost behavior patterns remain unchanged. Label each of the following statements as true or false with respect to next month. Do not use a calculator to answer items 1 through 6. You can use a calculator to answer items 7 through 12. Record your answers by placing an X under the appropriate heading.
Chapter 4 Solutions
Managerial Accounting for Managers
Ch. 4 - Why arent actual manufacturing overhead costs...Ch. 4 - What is the purpose of the job cost sheet in a...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - Prob. 4.6QCh. 4 - Prob. 4.7QCh. 4 - Prob. 4.8QCh. 4 - Prob. 4.9QCh. 4 - Prob. 4.10Q
Ch. 4 - Prob. 4.11QCh. 4 - Prob. 4.12QCh. 4 - Prob. 4.13QCh. 4 - Prob. 4.14QCh. 4 - Compute the Predetermined Overhead Rate [LO4-1]...Ch. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Direct Method of Determining cost of Goods sold...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Computing predetermined overhead Rates and 00b...Ch. 4 - Departmental Overhead Rates [LO4-1, LO4-2, LO4-3]...Ch. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Applying overhead; cost of Goods Manufactured...Ch. 4 - Prob. 4.13ECh. 4 - Prob. 4.14E
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