Answered: Support Departments Producing…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2BE: Support department allocations The centralized computer technology department of Hardy Company has...

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Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
Entries for process cost system Pori Ormond Carpel Company manufactures carpets. Fiber is placed in process in the Spinning Department, where it is spun into yarn. The output of the Spinning Department is transferred to the Tufting Department, where carpel hacking is added al the beginning of the process and the process is completed. On January 1, Port Ormond Carpet Company had the following inventories: Finished Goods 62,000 Work in ProcessSpinning Department 35,000 Work in ProcessTufting Department 28,500 Materials 17,000 Departmental accounts are maintained for factory overhead, and both have zero balances on January 1. Manufacturing operations for January are summarized as follows: a Materials purchased on account 500,000 b Materials requisitioned for use FiberSpinning Department 275,000 Carpet backingTufting Department 110,000 Indirect materialsSpinning Department 46,000 Indirect materialsTufting Department 39,500 c. Labor used Direct laborSpinning Department 185,000 Direct laborTufting Department 98,000 Indirect laborSpanning Department 18,500 Indirect laborTufting Department 9,000 d Depreciation charged on fixed assets: Spinning Department 12,500 Tufting Department 8,500 e. Expired prepaid factory insurance: Spinning Department 2,000 Tufting Department 1,000 f. Applied factory overhead Spinning Department 80,000 Tufting Department 55,000 g Production costs transferred from Spinning Department to Tufting Department 547,000 h Production costs transferred from Tufting Department to Finished Goods 807,200 i. Cost of goods sold during the period 795,200 Instructions 1. Journalize the entries to record the operations, identifying each entry by letter. 2. Compute the January 31 balances of the inventory accounts. 3. Compute the January 31 balances of the factory overhead accounts.
Budget performance report for a cost center Sneed Industries Company sells vehicle parts to manufacturers of heavy construction equipment. The Crane Division is organized as a cost center. The budget for the Crane Division for the month ended August 31, 20Y6, is as follows (in thousands): During August, the costs incurred in the Crane Division were as follows: Instructions For which costs might the director be expected to request supplemental reports?
Activity Cost Pools Total Cost Customer Orders Product Development Customer Relations Other Total Production Department: Indirect factory wages $400,000 50% 30% 15% 5% 100% Factory equipment depreciation 150,000 55% 30% 0% 15% 100% Factory utilities 120,000 59% 34% 0% 7% 100% Factory property taxes and insurance 75,000 57% 33% 0% 10% 100% General Administrative Department: Administrative wages and salaries 275,000 20% 10% 40% 30% 100% Office equipment depreciation 40,000 32% 16% 15% 37% 100% Adminstrative property taxes and insurance 60,000 0% 0% 0% 100% 100% Marketing Department: Marketing wages and salaries 150,000 20% 10% 40% 30% 100% Selling expenses 100,000 32% 16% 15% 37% 100% Required: Use the data to complete a First-Stage Allocation to Activity Cost Pools.
Overheads cost analysisRProduction 4 400 000Materials handling 1 000 000Set-up 1 050 000Quality control 1 900 000Materials procurement 400 000Cost driver analysisCost drivers Product A Product B TotalDirect labour hours 320 000 180 000 500 000Number of set-ups 420 280 700Materials movements 700 300 1 000Number of orders 1 300 700 2 000Number of inspections 1 140 760 1 900 Annual outputProduct A 200 000 unitsProduct B 100 000 units Use the information provided below to calculate the overhead cost per product using the followingcosting systems: Traditional Absorption Costing, using direct labour hours as the basis for allocation.…
Purchases = $80,000, custodial services = $10,000, indirect material = $60,000, direct labor = $50,000, and factory lunchroom = $80,000. Custodial services are 25% administrative. Compute total manufacturing overhead.
42. Summer Class Corp. operates two producing departments, C and D, and two service departments, E and F. The overhead before allocation of service department costs, together with the usage of services from the service departments, is:                                                                                 Overhead Before                                                                               Allocation of Service                        Services Provided by Department                                                           Department Costs                                E                   F Producing: C......................................................................                 P18,000                                      30%                    ‑-   D......................................................................                    29,000                                      30%              80% Service:…
A company has two departments A & B. Overhead is applied based on direct labour hours in department A and machine hours in department B. The following additional information is available:                                                             Department A                                     Department B Budgeted Overheads                           $300,000                                             $360,000 Budgeted direct labour hours             50,000                                                 40,000 Budgeted direct labour cost                $240,000                                             $330,000 Budgeted machine hours                    68,000                                                 80,000                         1. Given that the actual overheads were as follows Dept. A                                   Dept. B Direct labour hours…
Problem 18 Service Cost Allocation Irish Corporation distributes its service department overhead cost directly tto producing departments. Information for January, 2030 is presented below.                                                    Maintenance           Utilities FOH cost                                      93,500                    45,000 Service Provided to Maintenance                                                                  10% Utilities                                            20%            Mixing 40%                         30% Assembly                                         40%                         60% Required: Determined the amount of factory overhead cost of service departments allocated to producing departments using: Direct Method Step Method Reciprocal Method
Beginning direct materials $20,900 Beginning finished goods 32,000 Beginning work in process 21,200 Selling & administrative expenses 17,000 Gross profit 42,000 Cost of goods manufactured 328,000 Factory overhead ? Direct labor ? Direct materials purchases 124,100 Ending direct materials 24,800 Ending work…
Question Content Area Jensen Company reports the following: Line Item Description Amount Direct materials used $345,000 Direct labor incurred 250,000 Factory overhead incurred 400,000 Operating expenses 175,000 Jensen Company’s product costs are a. $995,000 b. $770,000 c. $825,000 d. $920,000
Direct materials $47,900 Direct labor $36,000 Manufacturing overhead $30,200 Selling expenses $20,800 Administrative expenses $32,300 Conversion costs during the month totaled: Multiple Choice $66,200 $78,100 $167,200 $83,900

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Support Departments Producing Departments General Factory Receiving Assembly Finishing Direct overhead $400,000 $160,000 2,700 Square footage Number of receiving orders Direct labor hours $43,000 5,400 1,680 25,000 $74,000 5,400 1,020 40,000 300