E11-10 Double-declining-balance method; switch to straight line
On January 2, 2011, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $30,625. The expenditures made to acquire the asset were as follows:
Purchase price $154,000
Freight charges 2,000
Installation charges 4,000
Jackson's policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment's life and then switch to straight line halfway through the equipment's life.
Required:
1. Calculate depreciation for each year of the asset's eight-year life.
2. Discuss the accounting treatment of the depreciation on the equipment.
Click here for the solution: On January 2, 2011, the Jackson Company purchased equipment to be used in its manufacturing process
Showing posts with label Manufacturing. Show all posts
Showing posts with label Manufacturing. Show all posts
Friday, April 15, 2016
Thursday, November 26, 2015
Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments
1. Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments? (Points : 1)
2. Process costing is used in companies that _______. (Points : 1)
3. A producer of ____ would not use a process costing system. (Points : 1)
4. Equivalent units of production are equal to the _______. (Points : 1)
5. In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP? (Points : 1)
6. The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent units _______. (Points : 1)
7. In a FIFO process costing system, which of the following are assumed to be completed first in the current period? (Points : 1)
8. The primary difference between the FIFO and weighted average methods of process costing is _______. (Points : 1)
9. In a cost of production report using process costing, transferred-in costs are similar to the ______. (Points : 1)
10. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a _______. (Points : 1)
11. Transferred-in cost represents the cost from _______. (Points : 1)
12. A hybrid costing system combines characteristics of _______. (Points : 1)
13. When standard costs are used in process costing, _______. (Points : 1)
14. The cost of abnormal continuous losses is _______. (Points : 1)
15. Normal spoilage units resulting from a continuous process _______. (Points : 1)
16. Listed below are the steps to assign costs to ending inventory using the weighted average method process costing method.
A. Assign the costs to the inventory accounts
B. Calculate the physical units accounted for
C. Calculate the physical units to account for
D. Calculate the equivalent units of production
E. Calculate the total costs to account for
F. Calculate the cost per equivalent units
(Points : 1)
17. Units started and completed during the period equals (Points : 1)
18. In process costing systems, unit costs are found by dividing total costs incurred by (Points : 1)
19. Equivalent units of production using the weighted average method of costing are found using which of the following formulas: (Points : 1)
20. Total costs to account for is: (Points : 1)
Click here for the solution: Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments
2. Process costing is used in companies that _______. (Points : 1)
3. A producer of ____ would not use a process costing system. (Points : 1)
4. Equivalent units of production are equal to the _______. (Points : 1)
5. In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP? (Points : 1)
6. The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent units _______. (Points : 1)
7. In a FIFO process costing system, which of the following are assumed to be completed first in the current period? (Points : 1)
8. The primary difference between the FIFO and weighted average methods of process costing is _______. (Points : 1)
9. In a cost of production report using process costing, transferred-in costs are similar to the ______. (Points : 1)
10. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a _______. (Points : 1)
11. Transferred-in cost represents the cost from _______. (Points : 1)
12. A hybrid costing system combines characteristics of _______. (Points : 1)
13. When standard costs are used in process costing, _______. (Points : 1)
14. The cost of abnormal continuous losses is _______. (Points : 1)
15. Normal spoilage units resulting from a continuous process _______. (Points : 1)
16. Listed below are the steps to assign costs to ending inventory using the weighted average method process costing method.
A. Assign the costs to the inventory accounts
B. Calculate the physical units accounted for
C. Calculate the physical units to account for
D. Calculate the equivalent units of production
E. Calculate the total costs to account for
F. Calculate the cost per equivalent units
(Points : 1)
17. Units started and completed during the period equals (Points : 1)
18. In process costing systems, unit costs are found by dividing total costs incurred by (Points : 1)
19. Equivalent units of production using the weighted average method of costing are found using which of the following formulas: (Points : 1)
20. Total costs to account for is: (Points : 1)
Click here for the solution: Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments
Monday, October 26, 2015
The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation
ACC 560 Week 2 Assignment
E3-7 The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation.
Production: 12,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs.
Manufacturing costs: Materials $33,000; labor $27,000; overhead $36,000.
Prepare a production cost report.
Click here for the solution: The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation
E3-7 The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation.
Production: 12,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs.
Manufacturing costs: Materials $33,000; labor $27,000; overhead $36,000.
Prepare a production cost report.
Click here for the solution: The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation
Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used
ACC 560 Week 2 Assignment
E2-5 Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $305,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used.
1. Compute the manufacturing overhead rate for the year.
2. What is the amount of under- or overapplied overhead at December 31?
3. Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.
Click here for the solution: Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used
E2-5 Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $305,000 for the year, and machine usage is estimated at 125,000 hours. For the year, $322,000 of overhead costs are incurred and 130,000 hours are used.
1. Compute the manufacturing overhead rate for the year.
2. What is the amount of under- or overapplied overhead at December 31?
3. Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.
Click here for the solution: Renteria Company applies manufacturing overhead to jobs on the basis of machine hours used
Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments
P2-4A Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department D, direct labor hours in Department E, and machine hours in Department K.
In establishing the predetermined overhead rates for 2008 the following estimates were made for the year.
Department
D E K
Manufacturing overhead $1,050,000 $1,500,000 $840,000
Direct labor costs $1,500,000 $1,250,000 $450,000
Direct labor hours 100,000 125,000 40,000
Machine hours 400,000 500,000 120,000
During January, the job cost sheets showed the following costs and production data.
Department
D E K
Direct materials used $140,000 $126,000 $78,000
Direct labor costs $120,000 $110,000 $37,500
Manufacturing overhead incurred $89,000 $124,000 $74,000
Direct labor hours 8,000 11,000 3,500
Machine hours 34,000 45,000 10,400
Required:
a) Compute the predetermined overhead rate for each department
b) Compute the total manufacturing costs assigned to jobs in January in each department
c) Compute the under- or overapplied overhead for each department at January 31
Click here for the solution: Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments
In establishing the predetermined overhead rates for 2008 the following estimates were made for the year.
Department
D E K
Manufacturing overhead $1,050,000 $1,500,000 $840,000
Direct labor costs $1,500,000 $1,250,000 $450,000
Direct labor hours 100,000 125,000 40,000
Machine hours 400,000 500,000 120,000
During January, the job cost sheets showed the following costs and production data.
Department
D E K
Direct materials used $140,000 $126,000 $78,000
Direct labor costs $120,000 $110,000 $37,500
Manufacturing overhead incurred $89,000 $124,000 $74,000
Direct labor hours 8,000 11,000 3,500
Machine hours 34,000 45,000 10,400
Required:
a) Compute the predetermined overhead rate for each department
b) Compute the total manufacturing costs assigned to jobs in January in each department
c) Compute the under- or overapplied overhead for each department at January 31
Click here for the solution: Mabry Manufacturing Company uses a job order cost system in each of its three manufacturing departments
Wednesday, October 14, 2015
Kozy Enterprises is considering manufacturing a new product
ACC 560 Week 4 Assignment
E5-2 Kozy Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units Rent Expense Direct Materials
1,000 $5,000 $4,000
2,000 5,000 6,000
3,000 5,000 7,800
4,000 7,000 8,000
5,000 7,000 10,000
6,000 7,000 12,000
7,000 7,000 14,000
8,000 7,000 16,000
9,000 7,000 18,000
10,000 10,000 23,000
11,000 10,000 28,000
12,000 10,000 36,000
Instructions
(a) Diagram the behavior of each cost for output ranging from 1,000 to 12,000 units.
(b) Determine the relevant range of activity for this product.
(c) Calculate the variable cost per unit within the relevant range.
(d) Indicate the fixed cost within the relevant range.
Click here for the solution: Kozy Enterprises is considering manufacturing a new product
E5-2 Kozy Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units Rent Expense Direct Materials
1,000 $5,000 $4,000
2,000 5,000 6,000
3,000 5,000 7,800
4,000 7,000 8,000
5,000 7,000 10,000
6,000 7,000 12,000
7,000 7,000 14,000
8,000 7,000 16,000
9,000 7,000 18,000
10,000 10,000 23,000
11,000 10,000 28,000
12,000 10,000 36,000
Instructions
(a) Diagram the behavior of each cost for output ranging from 1,000 to 12,000 units.
(b) Determine the relevant range of activity for this product.
(c) Calculate the variable cost per unit within the relevant range.
(d) Indicate the fixed cost within the relevant range.
Click here for the solution: Kozy Enterprises is considering manufacturing a new product
Sunday, October 4, 2015
The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier
ACC 560 Week 5 Assignment
P7-2A The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called WISCO, is a component of the company's finished product.
The following information was collected from the accounting records and production data for the year ending December 31, 2008.
1. 7,000 units of WISCO were produced in the Machining Department.
2. Variable manufacturing costs applicable to the production of each WISCO unit were: direct materials $4.80, direct labor $4.30, indirect labor $0.43, utilities $0.40.
3. Fixed manufacturing costs applicable to the production of WISCO were:
Cost Item Direct Allocated
Depreciation $2,100 $ 900
Property taxes 500 200
Insurance 900 600
$3,500 $1,700
All variable manufacturing and direct fixed costs will be eliminated if WISCO is purchased. Allocated costs will have to be absorbed by other production departments.
4. The lowest quotation for 7,000 WISCO units from a supplier is $70,000.
5. If WISCO units are purchased, freight and inspection costs would be $0.40 per unit, and receiving costs totaling $1,250 per year would be incurred by the Machining Department.
Hint: Make incremental analysis related to make or buy, consider opportunity cost, and identify nonfinancial factors.
Instructions
(a) Prepare an incremental analysis for WISCO. Your analysis should have columns for (1) Make WISCO, (2) Buy WISCO, and (3) Net Income Increase/(Decrease).
(b) Based on your analysis, what decision should management make?
(c) Would the decision be different if Borealis Company has the opportunity to produce $5,000 of net income with the facilities currently being used to manufacture WISCO? Show computations.
(d) What nonfinancial factors should management consider in making its decision?
Click here for the solution: The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier
P7-2A The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier. The part, called WISCO, is a component of the company's finished product.
The following information was collected from the accounting records and production data for the year ending December 31, 2008.
1. 7,000 units of WISCO were produced in the Machining Department.
2. Variable manufacturing costs applicable to the production of each WISCO unit were: direct materials $4.80, direct labor $4.30, indirect labor $0.43, utilities $0.40.
3. Fixed manufacturing costs applicable to the production of WISCO were:
Cost Item Direct Allocated
Depreciation $2,100 $ 900
Property taxes 500 200
Insurance 900 600
$3,500 $1,700
All variable manufacturing and direct fixed costs will be eliminated if WISCO is purchased. Allocated costs will have to be absorbed by other production departments.
4. The lowest quotation for 7,000 WISCO units from a supplier is $70,000.
5. If WISCO units are purchased, freight and inspection costs would be $0.40 per unit, and receiving costs totaling $1,250 per year would be incurred by the Machining Department.
Hint: Make incremental analysis related to make or buy, consider opportunity cost, and identify nonfinancial factors.
Instructions
(a) Prepare an incremental analysis for WISCO. Your analysis should have columns for (1) Make WISCO, (2) Buy WISCO, and (3) Net Income Increase/(Decrease).
(b) Based on your analysis, what decision should management make?
(c) Would the decision be different if Borealis Company has the opportunity to produce $5,000 of net income with the facilities currently being used to manufacture WISCO? Show computations.
(d) What nonfinancial factors should management consider in making its decision?
Click here for the solution: The management of Borealis Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it from an outside supplier
Sunday, September 27, 2015
Out of Eden, Inc. is planning to invest in new manufacturing equipment to make a new garden tool
EX 10-4 Out of Eden, Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 9,000 units at $42 each. The new manufacturing equipment will cost $156,000 and is expected to have a 10-year life and $12,000 residual value. Selling expenses related to the new product are expected to be 5% of sales revenues. The cost to manufacture the product includes the following on a per-unit basis:
Direct labor $7.00
Direct materials 23.40
Fixed factory overhead-depreciation 1.60
Variable factory overhead 3.60
Total $35.60
Determine the net cash flows for the first year of the project, Years 2-9 and for the last year of the project.
Click here for the solution: Out of Eden, Inc. is planning to invest in new manufacturing equipment to make a new garden tool
Direct labor $7.00
Direct materials 23.40
Fixed factory overhead-depreciation 1.60
Variable factory overhead 3.60
Total $35.60
Determine the net cash flows for the first year of the project, Years 2-9 and for the last year of the project.
Click here for the solution: Out of Eden, Inc. is planning to invest in new manufacturing equipment to make a new garden tool
Friday, September 25, 2015
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
Click here for the solution: Raney Company uses a flexible budget for manufacturing overhead based on direct labor hours
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
Click here for the solution: Raney Company uses a flexible budget for manufacturing overhead based on direct labor hours
Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data
ACC 560 Week 6 Assignment
E10-7 Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data.
Variable Costs Fixed Costs
Indirect materials $12,000 Supervisory salaries $36,000
Indirect labor 10,000 Depreciation 7,000
Utilities 8,000 Property taxes and insurance 8,000
Maintenance 6,000 Maintenance 5,000
Actual variable costs were: indirect materials $13,800, indirect labor $9,600, utilities $8,700, and maintenance $4,900. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,200. The actual activity level equaled the budgeted level.
All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.
Instructions
(a) Prepare a flexible manufacturing overhead budget report for the first quarter.
(b) Prepare a responsibility report for the first quarter.
Click here for the solution: Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data
E10-7 Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data.
Variable Costs Fixed Costs
Indirect materials $12,000 Supervisory salaries $36,000
Indirect labor 10,000 Depreciation 7,000
Utilities 8,000 Property taxes and insurance 8,000
Maintenance 6,000 Maintenance 5,000
Actual variable costs were: indirect materials $13,800, indirect labor $9,600, utilities $8,700, and maintenance $4,900. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,200. The actual activity level equaled the budgeted level.
All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.
Instructions
(a) Prepare a flexible manufacturing overhead budget report for the first quarter.
(b) Prepare a responsibility report for the first quarter.
Click here for the solution: Pletcher Company's manufacturing overhead budget for the first quarter of 2008 contained the following data
Vintage Dresses Inc. manufactures dresses in a small manufacturing facility
PR 7-1B Vintage Dresses Inc. manufactures dresses in a small manufacturing facility. Manufacturing has 20 employees. Each employee presently provides 35 hours of productive labor per week. Information about a production week is as follows:
Standard wage per hr. $10.80
Standard labor time per dress 12 min.
Standard number of yds of fabric per dress 38 yds
Standard price per yd of fabric $2.90
Actual price per yd of fabric $2.75
Actual yds of fabric used during the week 12,100 yds
Number of dresses produced during the week 3,250
Actual wage per hour $11.00
Actual hours per week 700 hrs
a. Determine the standard cost per dress for direct materials and direct labor. Round the cost per unit to two decimal places.
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Use the minus sign to enter favorable variances as negative numbers.
c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Use the minus sign to enter favorable variances as negative numbers.
Click here for the solution: Vintage Dresses Inc. manufactures dresses in a small manufacturing facility
Standard wage per hr. $10.80
Standard labor time per dress 12 min.
Standard number of yds of fabric per dress 38 yds
Standard price per yd of fabric $2.90
Actual price per yd of fabric $2.75
Actual yds of fabric used during the week 12,100 yds
Number of dresses produced during the week 3,250
Actual wage per hour $11.00
Actual hours per week 700 hrs
a. Determine the standard cost per dress for direct materials and direct labor. Round the cost per unit to two decimal places.
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Use the minus sign to enter favorable variances as negative numbers.
c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Use the minus sign to enter favorable variances as negative numbers.
Click here for the solution: Vintage Dresses Inc. manufactures dresses in a small manufacturing facility
Wednesday, September 23, 2015
For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (f) or variable (v)
2-19 Basic Concepts
For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (f) or variable (v) and whether they are most likely period costs (p) or product cost (m) and under full absorption costing.
1. Energy to run machines producing units of output in the factory.
2. Depreciation on the building for administrative staff offices.
3. Bonuses of top executives in the company.
4. Overtime pay for assembly workers.
5. Transportation-in costs on materials purchased.
6. Assembly line workers’ wages.
7. Sales commissions for sales personnel.
8. Administrative support for sales supervisors.
9. Controller’s office rental.
10. Cafeteria costs for the factory.
Click here for the solution: For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (f) or variable (v)
For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (f) or variable (v) and whether they are most likely period costs (p) or product cost (m) and under full absorption costing.
1. Energy to run machines producing units of output in the factory.
2. Depreciation on the building for administrative staff offices.
3. Bonuses of top executives in the company.
4. Overtime pay for assembly workers.
5. Transportation-in costs on materials purchased.
6. Assembly line workers’ wages.
7. Sales commissions for sales personnel.
8. Administrative support for sales supervisors.
9. Controller’s office rental.
10. Cafeteria costs for the factory.
Click here for the solution: For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (f) or variable (v)
Sunday, September 13, 2015
Timberland produces treated wood chips as a by-product of pulp manufacturing
Timberland produces treated wood chips as a by-product of pulp manufacturing. The Company purchases materials (chemicals, etc.) for $32 per ton of chips. Variable costs, including labor, costs $10 per ton. The chips can be sold for $70 per ton. Fixed costs, all unavoidable, equals $84,000.Timberland's incremental tax rate is 30%.
Required: 1. Prepare a budgeted income statement assuming that Timberland sells 2,500 tons.
2. What is the contribution margin per ton?
3. Calculate breakeven.
4. Assume the Company requires income of $14,000, how much in dollars does Timberland have to sale to achieve $14,000 profit?
5. Now assume the Company wishes to earn $35,711 after tax. What is the target operating income?
6. Next assume the Company now anticipates selling 3,200 tons of chips. Management believes that if $10,000 is invested in advertising the sale of chips will increase to 4,000 tons. Would you recommend the advertising?
7. As an alternative to advertising the factory foreman suggests that if the Company reduces the selling price to $61 per ton sales can be increased to 4,500 tons. Do you recommend the reduction in sales price?
Click here for the solution: Timberland produces treated wood chips as a by-product of pulp manufacturing
Required: 1. Prepare a budgeted income statement assuming that Timberland sells 2,500 tons.
2. What is the contribution margin per ton?
3. Calculate breakeven.
4. Assume the Company requires income of $14,000, how much in dollars does Timberland have to sale to achieve $14,000 profit?
5. Now assume the Company wishes to earn $35,711 after tax. What is the target operating income?
6. Next assume the Company now anticipates selling 3,200 tons of chips. Management believes that if $10,000 is invested in advertising the sale of chips will increase to 4,000 tons. Would you recommend the advertising?
7. As an alternative to advertising the factory foreman suggests that if the Company reduces the selling price to $61 per ton sales can be increased to 4,500 tons. Do you recommend the reduction in sales price?
Click here for the solution: Timberland produces treated wood chips as a by-product of pulp manufacturing
How do manufacturing costs flow through inventory accounts?
3. How do manufacturing costs flow through inventory accounts?
Click here for the solution: How do manufacturing costs flow through inventory accounts?
Click here for the solution: How do manufacturing costs flow through inventory accounts?
Tuesday, September 8, 2015
Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs
Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 20x1, consisted of one job (no. 2077), which was carried on the year-end balance sheet at $156,800. There was no finished-goods inventory on this date.
Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow.
Direct Materials Used $5,600,000.00
Direct Labor $4,350,000.00
Indirect Material Used $65,000.00
Indirect Labor $2,860,000.00
Factory Depreciation $1,740,000.00
Factory Insurance $59,000.00
Factory Utilities $830,000.00
Selling and Administrative Expenses $2,160,000.00
Total $17,664,000.00
Job no. 2077 was completed in January 20x2; there was no work in process at year-end. All jobs produced during 20x2 were sold with the exception of job no. 2143, which contained direct material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold.
Directions:
1 Calculate the companies predetermined overhead application rate.
2.Calculate the additions to the work-in-process inventory account for the direct material used, direct labor and manufacturing overhead.
3.Calculate the finished goods inventory for the 12/31/x2 balance sheet.
4.Calculate the over-applied or under applied overhead at year end.
5.Explain if it is appropriate to include the selling and administrative expenses within cost of goods sold.
Click here for the solution: Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs
Finlon applies manufacturing overhead to production on the basis of direct-labor cost. (The budgeted direct-labor cost is the company's practical capacity, in terms of direct-labor hours, multiplied by the budgeted direct-labor rate.) Budgeted totals for 20x2 for direct labor and manufacturing overhead are $4,200,000 and $5,460,000, respectively. Actual results for the year follow.
Direct Materials Used $5,600,000.00
Direct Labor $4,350,000.00
Indirect Material Used $65,000.00
Indirect Labor $2,860,000.00
Factory Depreciation $1,740,000.00
Factory Insurance $59,000.00
Factory Utilities $830,000.00
Selling and Administrative Expenses $2,160,000.00
Total $17,664,000.00
Job no. 2077 was completed in January 20x2; there was no work in process at year-end. All jobs produced during 20x2 were sold with the exception of job no. 2143, which contained direct material costs of $156,000 and direct-labor charges of $85,000. The company charges any under- or overapplied overhead to Cost of Goods Sold.
Directions:
1 Calculate the companies predetermined overhead application rate.
2.Calculate the additions to the work-in-process inventory account for the direct material used, direct labor and manufacturing overhead.
3.Calculate the finished goods inventory for the 12/31/x2 balance sheet.
4.Calculate the over-applied or under applied overhead at year end.
5.Explain if it is appropriate to include the selling and administrative expenses within cost of goods sold.
Click here for the solution: Finlon Upholstery, Inc. uses a job-order costing system to accumulate manufacturing costs
Sunday, August 23, 2015
Grevilla Corporation is a manufacturing company
Grevilla Corporation is a manufacturing company. The corporation has accumulated earnings of $950,000, and it can establish reasonable needs for $400,000 of that amount. Calculate the amount of the accumulated earnings tax (if any) that Grevilla Corporation is subject to for this year.
Click here for the solution: Grevilla Corporation is a manufacturing company
Click here for the solution: Grevilla Corporation is a manufacturing company
Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations
E19-11 Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations.
Indicate the missing amount for each letter.
Direct Materials Used Direct Labor Used Manufacturing Overhead total manufacturing costs work in process 1/1 work in process 12/31 cost of goods manufactured
1. $127,000 140,000 77,000 a: $ $33,000 b:$ $360,000
2. c: $ $200,000 132,000 450,000 d: $ 40,000 $470,000
3. $80,000 $100,000 e: $ $245,000 $60,000 $80,000 f:$
4. 70,000 g:$ 75,000 288,000 $45,000 h: $ $270,000
Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for situation (1) for the year ended December 31,2010.
Click here for the solution: Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations
Indicate the missing amount for each letter.
Direct Materials Used Direct Labor Used Manufacturing Overhead total manufacturing costs work in process 1/1 work in process 12/31 cost of goods manufactured
1. $127,000 140,000 77,000 a: $ $33,000 b:$ $360,000
2. c: $ $200,000 132,000 450,000 d: $ 40,000 $470,000
3. $80,000 $100,000 e: $ $245,000 $60,000 $80,000 f:$
4. 70,000 g:$ 75,000 288,000 $45,000 h: $ $270,000
Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for situation (1) for the year ended December 31,2010.
Click here for the solution: Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations
Bjerg Company specializes in manufacturing a unique model of bicycle helmet
Bjerg Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Bjerg's monthly manufacturing cost and other expense data are as follows.
Rent on factory equipment $ 7,000
Insurance on factory building 1,500
Raw materials (plastics, polystyrene, etc.) 75,000
Utility costs for factory 900
Supplies for general office 300
Wages for assembly line workers 43,000
Depreciation on office equipment 800
Miscellaneous materials (glue, thread, etc.) 1,100
Factory manager's salary 5,700
Property taxes on factory building 400
Advertising for helmets 14,000
Sales commissions 7,000
Depreciation on factory building 1,500
Required:
1. Complete the answer sheet. Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.
2. Compute the cost to produce one helmet.
Click here for the solution: Bjerg Company specializes in manufacturing a unique model of bicycle helmet
Rent on factory equipment $ 7,000
Insurance on factory building 1,500
Raw materials (plastics, polystyrene, etc.) 75,000
Utility costs for factory 900
Supplies for general office 300
Wages for assembly line workers 43,000
Depreciation on office equipment 800
Miscellaneous materials (glue, thread, etc.) 1,100
Factory manager's salary 5,700
Property taxes on factory building 400
Advertising for helmets 14,000
Sales commissions 7,000
Depreciation on factory building 1,500
Required:
1. Complete the answer sheet. Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.
2. Compute the cost to produce one helmet.
Click here for the solution: Bjerg Company specializes in manufacturing a unique model of bicycle helmet
Friday, August 14, 2015
Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs
Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs. The company’s work-in-process on December 31, 20x3, consisted of one job (no. 3088), which was carried on the year-end balance sheet at $78,400. There was no finished-goods inventory on this date.
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2,100,000 and $2,730,000, respectively.
Actual results for the year follow.
Direct material used................................. $2,800,000
Direct labor ................................................. 2,175,000
Indirect material used ................................... 32,500
Indirect labor ............................................. 1,430,000
Factory depreciation..................................... 870,000
Factory insurance .......................................... 29,500
Factory utilities ............................................ 415,000
Selling and administrative expenses ...... 1,080,000
Total ............................................ $8,832,000
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or over applied overhead to Cost of Goods Sold.
1. Determine the company’s predetermined overhead application rate.
2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
3. Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20x4, balance sheet.
4. Prepare the journal entry needed to record the year’s completed production.
5. Compute the amount of under- or over-applied overhead at year-end, and prepare the necessary journal entry to record its disposition.
6. Determine BBBC’s 20x4 cost of goods sold.
7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.
Click here for the solution: Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs
BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2,100,000 and $2,730,000, respectively.
Actual results for the year follow.
Direct material used................................. $2,800,000
Direct labor ................................................. 2,175,000
Indirect material used ................................... 32,500
Indirect labor ............................................. 1,430,000
Factory depreciation..................................... 870,000
Factory insurance .......................................... 29,500
Factory utilities ............................................ 415,000
Selling and administrative expenses ...... 1,080,000
Total ............................................ $8,832,000
Job no. 3088 was completed in January 20x4; there was no work in process at year-end. All jobs produced during 20x4 were sold with the exception of job no. 3154, which contained direct material costs of $78,000 and direct-labor charges of $42,500. BBBC charges any under- or over applied overhead to Cost of Goods Sold.
1. Determine the company’s predetermined overhead application rate.
2. Determine the additions to the Work-in-Process Inventory account for direct material used, direct labor, and manufacturing overhead.
3. Compute the amount BBBC would disclose as finished-goods inventory on the December 31, 20x4, balance sheet.
4. Prepare the journal entry needed to record the year’s completed production.
5. Compute the amount of under- or over-applied overhead at year-end, and prepare the necessary journal entry to record its disposition.
6. Determine BBBC’s 20x4 cost of goods sold.
7. Would it be appropriate to include selling and administrative expenses in either manufacturing overhead or cost of goods sold? Briefly explain.
Click here for the solution: Birmingham Bowling Ball Company (BBBC) uses a job-order costing system to accumulate manufacturing costs
Tuesday, August 4, 2015
Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead
Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead. Estimated overhead for the upcoming year is $776,000. Budgeted machine hours are 105,000 hours, and budgeted labor hours are 17,500 hours at a rate of $10.00 per hour. Compute the predetermined overhead rate based on:
(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours
Click here for the solution: Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead
(a) Direct labor dollars
(b) Direct labor hours
(c) Machine hours
Click here for the solution: Thibodeaux Limousine Corporation is trying to determine a predetermined manufacturing overhead
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