Raney Company uses a flexible budget for manufacturing overhead based on direct labor hours

ACC 560 Week 6 Assignment

E10-4 Raney Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.
Indirect labor $1.00
Indirect materials 0.50
Utilities 0.40

Fixed overhead costs per month are: Supervision $4,000, Depreciation $1,500, and Property Taxes $800. Assume that in July 2008, Raney Company incurs the following manufacturing overhead costs.
Variable Costs Fixed Costs
Indirect labor $8,700 Supervision $4,000
Indirect materials 4,300 Depreciation 1,500
Utilities 3,200 Property taxes 800

Instructions
a) Prepare a flexible budget performance report, assuming that the company worked 9,000 direct labor hours during the month.
b) Prepare a flexible budget performance report, assuming that the company worked 8,500 direct labor hours during the month.
c) Comment on your finding

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The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at $5.00 per unit

ACC 560 Week 7 Assignment

E11-5 The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at $5.00 per unit. During June, 28,000 units of direct materials are purchased at a cost of $4.70 per unit, and 28,000 units of direct materials are used to produce 9,000 units of Product B.

Instructions:
a) Compute the total materials variance and the price and quantity variances.

b) Repeat the question above, assuming the purchase price is $5.20 and the quantity purchased and used is 26,200 units.

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Which method (direct or indirect) of presenting the statement of cash flows is more intuitively logical? Why?

13. Which method (direct or indirect) of presenting the statement of cash flows is more intuitively logical? Why?


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When would you advise a firm to use direct intervention to set transfer prices?

When would you advise a firm to use direct intervention to set transfer prices? What are the disadvantages of such a practice?


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Bubba’s Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours

Bubba’s Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $2,250,000 and direct labor hours are budgeted at 415,000 hours. Actual overhead was $2,200,000 and actual direct labor hours worked were 422,000.

(a) Calculate the predetermined overhead rate.
(b) Calculate the overhead applied.
(c) Determine the amount of overhead that is over/underapplied.

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Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead

Problem 13-44 Cost-Based Pricing Decision

Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in light of other factors (e.g., competitive pressure). Last year’s income statement is as follows:

Sales $130,000
Cost of Goods Sold $48,100
Gross Margin $81,900
Selling and Admin Expense $46,300
Operating Income $35,600

1. Calculate the markup that Jeremy will use.
2. What is Jeremy's initial bid price?

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In Paige Company, direct labor is $20 per hour

BE10-3 In Paige Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2014, direct labor totaling $204,000 in incurred in working 10,400 hours.

Prepare (a) a static budget report and (b) a flexible budget report. Evaluate the usefulness of each report.

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For 2013, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct labor hour

(Predetermined Overhead Rate) For 2013, Omaha Mechanical has a monthly overhead cost formula of $42,900 + $6 per direct labor hour. The firm’s 2013 expected annual capacity is $78,000 direct labor hours, to be incurred evenly each month. Making one unit of the company product requires 1.5 direct labor hours.

a. Determine the total overhead to be applied per unit of product in 2013.
b. Prepare journal entries to record the application of overhead to Work in process inventory and the incurrence of $128,550 of actual overhead in January 2013, when 6,390 direct labor hours were worked.
c. Given the actual direct labor hours in (b), how many units would you have expected to be produced in January.

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ACC 421 Week 5 (SCF-Direct Method) Data for Pat Metheny Company are presented in E23-11

ACC 421 Week 5

Exercise 23-12 (E23-12) (SCF-Direct Method) Data for Pat Metheny Company are presented in E23-11.

Instructions
Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

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George Winston Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company

ACC 421 Week 5

Problem 23-7 (P23-7) (SCF-Direct and Indirect Methods from Comparative Financial Statements) George Winston Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative statement of financial position and income statement for Winston as of May 31, 2008, are shown on the next page. The company is preparing its statement of cash flows.

AND SO ON

The following is additional information concerning Winston’s transactions during the year ended
May 31, 2008.
1. All sales during the year were made on account.
2. All merchandise was purchased on account, comprising the total accounts payable account.
3. Plant assets costing $98,000 were purchased by paying $48,000 in cash and issuing 5,000 shares of stock.
4. The “other expenses” are related to prepaid items.
5. All income taxes incurred during the year were paid during the year.
6. In order to supplement its cash, Winston issued 4,000 shares of common stock at par value.
7. There were no penalties assessed for the retirement of bonds.
8. Cash dividends of $105,000 were declared and paid at the end of the fiscal year.

Instructions
(a) Compare and contrast the direct method and the indirect method for reporting cash flows from operating activities.
(b) Prepare a statement of cash flows for Winston Company for the year ended May 31, 2008, using the direct method. Be sure to support the statement with appropriate calculations. (A reconciliation of net income to net cash provided is not required.)
(c) Using the indirect method, calculate only the net cash flow from operating activities for Winston Company for the year ended May 31, 2008.


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3-46 (Job bid price, direct, sequential, and reciprocal allocations) Small Pump Manufacturer

3-46 (Job bid price, direct, sequential, and reciprocal allocations) Small Pump Manufacturer Service Departments Production Departments Item Maintenance Power Casting Assembly Support Costs $750,000 $450,000 $150,000 $110,000 Machine Hours 0 80000 80000 40000 Kilowatt-hours 40000 0 200000 160000 Direct Labor Hours 0 0 100000 60000 Management allocates maintenance department costs using machine hours Management allocates power deptepartment costs using kilowatt hours Separate cost driver rates are determined on machine hours basis for casting dept and on direct labor hours basis for assembly dept 1 machine hour per pump manufacture in casting department .5 labor hours to assemble pump in assembly dept Direct labor and material costs = $32.00 per pump Potential Sell: 2 year contract to purchase 1000 pumps every month Add 25% markup to full manufacturing cost to determine bid BID PRICE for. a) Direct Method b) Sequential Method begins by allocating maintenance department costs c) Reciprocal Method
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ACC 561 EXCEL Application Exercise 12-59, Allocating Costs Using Direct and Step-Down Methods

ACC 561 EXCEL Application Exercise 12-59, Allocating Costs Using Direct and Step-Down Methods, on p. 584

Goal: Create an Excel spreadsheet to allocate costs using the direct method and the stepdown
method. Use the results to answer questions about your findings.
Scenario: Antonio Cleaning has asked you to help them determine the best method for
allocating costs from their service departments to their producing departments. Additional
background information for your spreadsheet appears in Fundamental Assignment Material
12-B2. Exhibit 12-4 on page 532 illustrates the types of calculations that are used for
allocating costs using the direct method and the step-down method.

When you have completed your spreadsheet, answer the following questions:
1. What are the total costs for the Residential department using the direct method?
What are the total costs for the Commercial department using the direct method?
2. What are the total costs for the Residential department using the step-down method?
3. What are the total costs for the Commercial department using the step-down method?
4. Which method would you recommend that Antonio Cleaning use to allocate their
service departments’ costs to their producing departments? Why?

Step-by-Step:
1. Open a new Excel spreadsheet.
2. In column A, create a bold-faced heading that contains the following:
Row 1: Chapter 12 Decision Guideline
Row 2: Dallas Cleaning
Row 3: Cost Allocations from Service Departments to Producing Departments
Row 4: Today’s Date
3. Merge and center the four heading rows across columns A through H.
4. In row 7, create the following bold-faced, center-justified column headings:
Column B: Personnel
Column C: Administrative
Column D: Residential
Column E: Commercial
Column F: Total Res/Comm
Column G: Total Admin/Res/Comm
Column H: Grand Total
5. Change the format of the column headings in row 7 to permit the titles to be displayed
on multiple lines within a single cell.
Alignment tab: Wrap Text: Checked
Note: Adjust column widths so that headings use only two lines.
Adjust row height to ensure that row is same height as adjusted headings.
6. In column A, create the following row headings:
Row 8: Direct Department Costs
Row 9: Number of Employees
Skip 2 rows
Note: Adjust the width of column A to 27.14.
7. In column A, create the following bold-faced, underlined row heading:
Row 12: Direct Method:
8. In column A, create the following row headings:
Row 13: Direct Department Costs
Row 14: Personnel Allocation
Row 15: Administrative Allocation
Row 16: Total Costs
Skip 2 rows
9. In column A, create the following bold-faced, underlined row heading:
Row 19: Step-down Method:
10. In column A, create the following row headings:
Row 20: Direct Department Costs
Row 21: Step 1—Personnel Allocation
Row 22: Step 2—Administrative Allocation
Row 23: Total Costs
11. Use data from Fundamental Assignment 12-B2 to enter the amounts in columns B
through E for rows 8, 9, 13, and 20.
12. Use the appropriate calculations to do the totals in row 8 for columns F and H.
Use the appropriate calculations to do the totals in row 9 for columns F and G.
13. Use the appropriate formulas to allocate the costs from the service departments to the
producing departments using each of the methods.
14. Use the appropriate calculations to do the totals in columns B through E and in column H,
rows 16 and 23.
15. Format amounts in columns B through H, rows 8, 13, 16, 20, and 23 as
Number tab: Category: Accounting
Decimal: 0
Symbol: $
16. Format the amount in columns B through E, rows 14, 15, 21, and 22 as
Number tab: Category: Accounting
Decimal: 0
Symbol: None
17. Change the format of the total costs amounts in columns B through E, rows 16 and 23,
to display a top border, using the default line style.
Border tab: Icon: Top Border
18. Change the format of the amounts in row 9, columns B through G to center justified

Click here for the solution: ACC 561 EXCEL Application Exercise 12-59, Allocating Costs Using Direct and Step-Down Methods