ACC 560 Week 2 Assignment
E3-14 Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations. The operation consists of three segments (departments): receiving, shipping, and delivery. Containers are received at Container's docks and sorted according to the ship they will be carried on. The containers are then loaded onto a ship, which carries them to the appropriate port of destination. The containers are then off-loaded and delivered to the receiving company. Container shipping wants to begin to use process costing in the shipping department. Direct materials represent the fuel costs to run the ship, and "Containers in transit" represents work in process. Listed below is information about the shipping department's first month's activity.
Containers in Transit April 1 0
Containers loaded 800
Containers in Transit April 30 350 40% of direct materials and
30% of conversion costs
Determine the physical flow of containers for the month
Compute the equivalent units for direct materials and conversion costs
Click here for the solution: Container Shipping, Inc. is contemplating the use of process costing to track the cost of its operations
Showing posts with label costing. Show all posts
Showing posts with label costing. Show all posts
Monday, October 26, 2015
Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
E2-13 Easy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
Budgeted overhead $960,000
Actual overhead $982,800
Budgeted decorator hours 40,000
Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
Required:
a) Compute the predetermined overhead rate.
b) Prepare the entry to apply the overhead for the year.
c) Determine whether the overhead was under- or overapplied and by how much.
Click here for the solution: Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
Budgeted overhead $960,000
Actual overhead $982,800
Budgeted decorator hours 40,000
Actual decorator hours 40,500
The company uses Operating Overhead in place of Manufacturing Overhead.
Required:
a) Compute the predetermined overhead rate.
b) Prepare the entry to apply the overhead for the year.
c) Determine whether the overhead was under- or overapplied and by how much.
Click here for the solution: Easy Decorating uses a job order costing system to collect the costs of its interior decorating business
Wednesday, October 14, 2015
Dewey and Cheatam is a law firm that is initiating an activity-based costing system
ACC 560 Week 3 Assignment
E4-16 Dewey and Cheatam is a law firm that is initiating an activity-based costing system. Jim Dewey, the senior partner and strong supporter of ABC, has prepared the following list of activities performed by a typical attorney in a day at the firm.
Classify each activity as either value-added or non-value-added.
Activity Hours
Writing contracts and letters 1.0
Attending staff meetings 0.5
Taking depositions 1.0
Doing research 1.0
Traveling to/from court 1.0
Contemplating legal strategy 1.0
Eating lunch 1.0
Litigating a case in court 2.5
Entertaining a prospective client 2.0
Instructions:
a) How much was value-added time
b) How much was non-value-added time
Click here for the solution: Dewey and Cheatam is a law firm that is initiating an activity-based costing system
E4-16 Dewey and Cheatam is a law firm that is initiating an activity-based costing system. Jim Dewey, the senior partner and strong supporter of ABC, has prepared the following list of activities performed by a typical attorney in a day at the firm.
Classify each activity as either value-added or non-value-added.
Activity Hours
Writing contracts and letters 1.0
Attending staff meetings 0.5
Taking depositions 1.0
Doing research 1.0
Traveling to/from court 1.0
Contemplating legal strategy 1.0
Eating lunch 1.0
Litigating a case in court 2.5
Entertaining a prospective client 2.0
Instructions:
a) How much was value-added time
b) How much was non-value-added time
Click here for the solution: Dewey and Cheatam is a law firm that is initiating an activity-based costing system
Monday, October 5, 2015
Benson, Inc. produces three separate products from a common process costing $100,000
ACC 560 Week 5 Assignment
E7-8 Benson, Inc. produces three separate products from a common process costing $100,000. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period.
Sales Value at Split-off Point Cost to Process Further Sales Value After Further Processing
Product 12 $50,000 $100,000 $190,000
Product 14 10,000 30,000 35,000
Product 16 60,000 150,000 220,000
a. Determine total net income if all products are sold at the split-off point.
b. Determine total net income if all products are sold after further processing.
c. Using incremental analysis, determine which products should be sold at the split-off point and which should be processed further.
d. Determine total net income using the results from the previous part of the question.
Click here for the solution: Benson, Inc. produces three separate products from a common process costing $100,000
E7-8 Benson, Inc. produces three separate products from a common process costing $100,000. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period.
Sales Value at Split-off Point Cost to Process Further Sales Value After Further Processing
Product 12 $50,000 $100,000 $190,000
Product 14 10,000 30,000 35,000
Product 16 60,000 150,000 220,000
a. Determine total net income if all products are sold at the split-off point.
b. Determine total net income if all products are sold after further processing.
c. Using incremental analysis, determine which products should be sold at the split-off point and which should be processed further.
d. Determine total net income using the results from the previous part of the question.
Click here for the solution: Benson, Inc. produces three separate products from a common process costing $100,000
Sunday, September 13, 2015
How does the variable costing approach differ from the absorption costing approach?
16. How does the variable costing approach differ from the absorption costing approach? Explain the different income statement formats used with each approach.
Click here for the solution: How does the variable costing approach differ from the absorption costing approach?
Click here for the solution: How does the variable costing approach differ from the absorption costing approach?
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
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
Wednesday, June 24, 2015
At the beginning of 2008, Lehman Company acquired equipment costing $90,000
Problem 10-4A (P10-4A) At the beginning
of 2008, Lehman Company acquired equipment costing $90,000. It was
estimated that this equipment would have a useful life of 6 years and a
residual value of $9,000 at the time. The straight-line method of
depreciation was considered the most appropriate to use with this type
of equipment. Depreciation is to be recorded at the end of each year.
Click here for the solution: At the beginning of 2008, Lehman Company acquired equipment costing $90,000
During 2010 (the third year of the equipment's life), the company's
engineers reconsidered their expectations, and estimated that the
equipment's useful life would probably be 7 years (in total) instead of 6
years. The estimated residual value was not changed at that time.
However, during the estimated 2013 the estimated residual Value was
reduced to $5,000.
Instructions:
Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table.
Instructions:
Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table.
Click here for the solution: At the beginning of 2008, Lehman Company acquired equipment costing $90,000
Wednesday, May 27, 2015
4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
Click here for the solution: 4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
COST POOLS ACTIVITY COSTS COST DRIVERS
Machine setup $360,000 6,000 setup hours
Materials handling 100,000 50,000 pounds of material
Electric power 40,000 80,000 kilowatt-hours
The following information pertains to the production of V203 and G179
ITEM V203 G179
Number of units produced 5,000 15,000
Direct materials cost $25,000 $33,000
Direct labor cost $14,000 $16,000
Number of setup hours 120 150
Pounds of material used 5,000 10,000
Kilowatt-hours 2,000 3,000
Determine the unit cost for each of the two products using activity-based costing.
Click here for the solution: 4-23 (Traditional activity-based costs) VG Company has identified the following cost pools and cost drivers
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