Costs and Direct Labor Cost

Midterm2Practice rouge 1. The quest data have been put down for recently completed Job 501 on its job live sheet. site substantials bell was $3,067. A total of 30 immediately outwear-hours and 104 utensil-hours were worked on the job. The leave agitate clear up income rate is $12 per apprehend-hour. The guild applies manufacturing command processing viewgraph time on the basis of railway carhours. The predetermined bash rate is $11 per machine-hour. The total be for the job on its job make up sheet would be A. $4,571 B. $3,757 C. $3,090 D. 3,427 Applied manufacturing disk command processing budget items time = Predetermined crash rate x Actual machine-hours Applied manufacturing disk overhead = $11 x 104 Applied manufacturing overhead = $1,144 entire exist = locate materials + Direct ram + Applied manufacturing overhead congeries hail of Job 607 = $3,067 + (30 x $12) + $1,144 = $4,571 Loraine friendship applies manufacturing overhead to jobs using a predetermined overhead rate of 70% of address labor damage. Any underapplied or overapplied overhead constitute is closed to Cost of Goods Sold at the end of the month. During r arefied, the following transactions were save by the company 2.The amount of institutionalise materials comprise in the August 31 Work in Process scrutinize handbill was A. $10, two hundred B. $9,000 C. $4,800 D. $4,200 3. The Cost of Goods Manufactured for August was A. $69,600 B. $69,500 C. $76,900 D. $84,500 4. The balance on August 1 in the Raw Materials inventory account was A. $4,500 B. $7,000 C. $9,000 D. $11,500 5. Schrick Inc. manufactures a variety of fruits. varying star salute net income in operation(p) income was $86,800 last stratum and ending inventory increased by 1,900 units. fixed manufacturing overhead apostrophize was $6 per unit. What was the engrossment bell net operating income last class? A. 86,800 B. $75,400 C. $98,200 D. $11,400 Fixed manufacturing overhead d eferred = $6 x 1,900 = $11,400 Absorption be net income = Variable be net operating income + Fixed manufacturing overhead deferred = $86,800 + $11,400 = $98,200 6. Ben Company produces a single mathematical product. Last socio-economic class, the companys net operating income under absorption be was $4,400 lower than under shifting appealing. The company sold 8,000 units during the category, and its multivariate be were $8 per unit, of which $3 was variable selling expense. Fixed manufacturing overhead was $1 per unit in beginning inventory under absorption greeting.How many units did the company produce during the year? A. 12,400 units B. 3,600 units C. 7,120 units D. 7,450 units social unit fixed manufacturing overhead = (Difference in income / Change in inventory) = $4,400 Change in inventory = $1 Change in inventory = 4,400 units building blocks produced during the year = 8,000 units sold 4,400 units counter interpolate in inventory = 3,600 units Ross Company pro duces a single product. The company has direct materials cost of $8 per unit, direct labor be of $6 per unit, and manufacturing overhead of $10 per unit. lx percent of the manufacturing overhead is for fixed be.In addition, variable selling and administrative costs are $2 per unit, and fixed selling and administrative costs are $3 per unit at the current natural process level. fatigue that direct labor is a variable cost. 7. Under absorption costing, the unit product cost is A. $24 B. $20 C. $26 D. $29 Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead cost + Fixed manufacturing overhead cost = $8 + $6 + $10* = $24 * Manufacturing overhead cost of $10 includes variable and fixed costs. 8. Under variable costing, the unit product cost is A. $24 B. $20 C. $18 D. 21 Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead = $8 + $6 + $10 x (100% 60%) = $8 + $6 + $4= $18 9. Viren Corporation has provided the following data from its activity- shewd costing trunk The company makes 240 units of product T91H a year, requiring a total of 550 machine-hours, 90 orders, and 40 inspection-hours per year. The products direct materials cost is $16. 98 per unit and its direct labor cost is $12. 09 per unit. agree to the activity-based costing system, the average cost of product T91H is closest to A. $79. 66 per unit B. 90. 81 per unit C. $29. 07 per unit D. $75. 70 per unit 10. Data concerning three of the activity cost kitty-cats of Bramhall LLC, a legal firm, have been provided under The activity rate for the clashing with clients activity cost share is closest to A. $ one hundred twenty-five per meeting hour B. $65 per meeting hour C. $80 per meeting hour D. $665,500 per meeting hour Kleppe Corporation has provided the following data from its activity-based costing accounting system The Other activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not as sign to products. 1. How a lot indirect pulverization stipend and factory equipment depreciation cost would be assigned to the Customer Orders activity cost pool? A. $240,000 B. $72,000 C. $68,000 D. $480,000 12. How much indirect factory wages and factory equipment depreciation cost would not be assigned to products using the activity-based costing system? A. $0 B. $68,000 C. $280,000 D. $200,000 13. In this problem, thither are three possible overhead assignation bases direct labor (present system), machine hours (the proposed system), and proceeds of destinyes.First, calculate product costs under each of the three allocation schemes (a). Direct labor cost as the allocation base (present system) Blueaffairs 120,000 . 50 $60,000 95. 238% 342,857 60,000 $462,857 $ 3. 857 Graythings 6,000 . 50 $3,000 4. 762% 17,143 3,000 $23,143 $ 3. 857 Total 126,000 Number of units Direct labor/unit Direct labor cost % of total direct labor cost smash-up allocated Direct material cost Total cost Unit cost $63,000 360,000 63,000 $486,000 (b). Machine hours as the allocation base (proposed system) Bluethings 120,000 600 200 20 4000 95. 38% $342,857 60,000 60,000 $462,857 $ 3. 857 Graythings 6,000 30 200 1 200 4. 762% $17,143 3,000 3,000 $23,143 $ 3. 857 Total 126,000 Number of units/year ? number of units/batch Number of batches/year x number of hours per batch Number of machine hours/year % of total machine hours Overhead allocated Direct labor cost Direct material cost Total cost Unit cost 4200 $360,000 63,000 63,000 $486,000 (c). Number of batches as the allocation base Bluethings 120,000 600 200 50% $180,000 60,000 60,000 $300,000 $2. 50 Graythings 6,000 30 200 50% $180,000 3,000 3,000 $186,000 $31. 0 Total 126,000 400 Number of units/year ? number of units/batch Number of batches/year % of total batches Overhead allocated Direct labor cost Direct material cost Total cost Unit cost $360,000 63,000 63,000 $486,000 Notice that allocating overhead by each direct labor or machine hours produces identical product costs. Thus, the proposed system change will not affect finale making. There are two cost rentrs in Set-up Company. Unit volume drives direct materials and direct labor, but set-ups (number of batches) appear to drive overhead costs.Allocating overhead using direct labor gives an incorrect impression of how overhead costs vary and distorts product costs. Overhead costs are incurred in setups. eyepatch run times per unit of thing is the same for blues and grays, batch sizes disagree considerably. In fact, bluethings and graythings each required 200 batches. Therefore, each product line (as conflicting to each unit of product) should be allocated an jibe dollar amount of overhead. If this is done, then graythings function massive losers and bluethings are seen to be profitable, crimson with market price of $3 per unit.