Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem 3.25AE
Analyze manufacturing overhead (Learning Objectives 3 & 5)
Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following:
| $ 630,000 | |
| Direct labor cost | $1,650,000 |
| Machine hours | 90,000 |
At the end of the year, the company had actually incurred the following:
| Direct labor cost | $1,230,000 |
| $ 480,000 | |
| Property taxes on plant | $ 19,500 |
| Sales salaries | $ 26,500 |
| Delivery drivers’ wages | $ 17,000 |
| Plant janitors’ wages | $ 8,500 |
| Machine hours | 56,500 hours |
Requirements
- 1. Compute Smith’s predetermined manufacturing overhead rate.
- 2. How much manufacturing overhead was allocated to jobs during the year?
- 3. How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much?
- 4. Were the jobs overcosted or undercosted? By how much?
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In Class Assignment 1
AlSaleh has assigned overhead on a plantwide basis to its two products (Tables and Chairs) using
direct labor hours which are estimated to be 200,000 for the current year. The company has decided
to experiment with activity-based costing and has created two activity cost pools and related
activity cost drivers. These two cost pools are Ordering and receiving (cost driver is Purchase
orders) and machine setup (cost driver is number of setups). Overhead allocated to the ordering
and receiving cost pool is $200,000, and $800,000 is allocated to the machine setup cost pool.
Additional information related to these pools is as follows:
Cost Drivers
Tables
Chairs
Purchase orders
30,000
10,000
number of setups
10,000
30,000
a. Determine the amount of overhead assigned to the table product line and the chairs product
line using activity-based costing.
b. What amount of overhead would be assigned to the tables and chairs product lines using
the traditional approach,…
Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow:
(Click icon to view data)
Requirement
Calculate the total variable costs of producing 2, 4, and 8 units.
Begin by calculating the cumulative total time in labor-hours using the cumulative average-time learning model. (Round the cumulative average time per unit to the nearest whole number.)
Cumulative number of Cumulative average time
Cumulative total time:
per unit: Labor-hours
Labor-hours
3700
units
2
4
8
3700
←
Data table
Direct material cost
Direct manufacturing labor time for first unit
Learning curve for manufacturing labor time per radar system
Direct manufacturing labor cost
Variable manufacturing overhead cost
Using the formula for an 85% learning curve, b =
In 0.85
In 2
Print
=
$
$
$
-0.162519
0.693147
81,000 per unit of RS-32
3,700 direct manufacturing labor-hours
85% cumulative average timeª
Done
28 per direct…
Your Company uses a predetermined overhead rate based on direct labor hours. The POR is $10 per direct labor hour. Use the following information to determine by how much the manufacturing overhead cost for the current year will be over or under applied.
Direct labor-hours:
Estimated for the year
25,000
Actual hours worked
25,600
Direct labor cost:
Estimated for the year
$300,000
Actual cost incurred
$210,000
Manufacturing overhead:
Estimated for the year
$250,000
Actual cost incurred
$252,000
The manufacturing overhead cost for the current year will be:
O $6,000 under applied
O $6,000 over applied
O $4,000 over applied
O $4,000 under applied
Chapter 3 Solutions
Managerial Accounting (5th Edition)
Ch. 3 - (Learning Objective 1) For which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 2) Which of the following...Ch. 3 - (Learning Objective 3) The amount of manufacturing...Ch. 3 - (Learning Objective 4) Which of the following is...Ch. 3 - (Learning Objective 5) Which of the following is...Ch. 3 - (Learning Objective 5) Assuming the amount of...Ch. 3 - Prob. 8QCCh. 3 - Prob. 9QCCh. 3 - Prob. 10QC
Ch. 3 - Identify product costs, period costs, and product...Ch. 3 - Decide on product costing system (Learning...Ch. 3 - Determine the flow of costs between inventory...Ch. 3 - Understanding key document terms in a job cost...Ch. 3 - Compute a professional billing rate (Learning...Ch. 3 - Prob. 3.6SECh. 3 - Continuation of S3-6: compute total allocated...Ch. 3 - Continuation of S3-7: determine over- or under...Ch. 3 - Prob. 3.9SECh. 3 - Calculate job cost and billing at appliance repair...Ch. 3 - Calculating overallocated or underallocated...Ch. 3 - Prob. 3.12SECh. 3 - Record manufacturing labor costs (Learning...Ch. 3 - Prob. 3.14SECh. 3 - Prob. 3.15SECh. 3 - Understanding key terms (Learning Objectives 1, 2,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Prob. 3.18AECh. 3 - Determine the cost of a job and use it for pricing...Ch. 3 - Compute a predetermined overhead rate and...Ch. 3 - Prob. 3.21AECh. 3 - Prob. 3.22AECh. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Job cost and bid price at a consulting firm...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Identify type of costing system (Learning...Ch. 3 - Understand the flow of costs in a job cost shop...Ch. 3 - Prob. 3.33BECh. 3 - Prob. 3.34BECh. 3 - Prob. 3.35BECh. 3 - Sustainability and job costing (Learning...Ch. 3 - Determine the cost of a job (Learning Objectives...Ch. 3 - Compare bid prices under two different allocation...Ch. 3 - Analyze manufacturing overhead (Learning...Ch. 3 - Record manufacturing overhead (Learning Objectives...Ch. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze T-accounts (Learning Objectives 2, 3, 5, ...Ch. 3 - Prob. 3.43BECh. 3 - Record journal entries (Learning Objectives 2, 3,...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Analyze Manufacturing Overhead (Learning...Ch. 3 - Use job costing at an advertising agency (Learning...Ch. 3 - Use job costing at a consulting firm (Learning...Ch. 3 - Prepare job cost record (Learning Objectives 2, 3,...Ch. 3 - Determine and record job costs (Learning...Ch. 3 - Determine flow of costs through accounts (Learning...Ch. 3 - Job costing or process costing for wedding...Ch. 3 - Discussion Questions 1. Why would it be...Ch. 3 - Unwrapped or How Its Made Go to www.YouTube.com...Ch. 3 - Ethics involved with choice of cost driver...Ch. 3 - Prob. 3.61ACTCh. 3 - Issues with cost of job (Learning Objectives 2, 3,...
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