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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Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour

ACC 560 Week 7 Assignment

E11-6 Scheer Company's standard labor cost of producing one unit of Product DD is 4 hours at the rate of $12.00 per hour. During August, 40,800 hours of labor are incurred at a cost of $12.10 per hour to produce 10,000 units of Product DD.

Instructions:
a) Compute the total labor variance.
b) Compute the labor price and quantity variances.
c) Repeat the previous question, assuming the standard is 4.2 hours of direct labor at $12.25 per hour.

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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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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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Martinez Company has decided to introduce a new product

Martinez Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows.

Capital-Intensive Labor-Intensive
Direct materials $5 per unit $5.50 per unit
Direct labor $6 per unit $8.00 per unit
Variable overhead $3 per unit $4.50 per unit
Fixed manufacturing costs $2,508,000 $1,538,000

Martinez's market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method.

(a) Calculate the estimated break-even point in annual unit sales of the new product if Martinez Company uses the:
(1) Capital-intensive manufacturing method.
(2) Labor-intensive manufacturing method.
(b) Determine the annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods.
(c) Explain the circumstance under which Martinez should employ each of the two manufacturing methods.

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