Project #12897 - Costing and Activity based Accounting

Question 1

Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $337,500 for the year, and machine usage is estimated at 125,000 hours.

For the year, $358,011 of overhead costs are incurred and 130,900 hours are used.
Manufacturing overhead rate   $  per machine hour

What is the amount of under- or overapplied overhead at December 31?

Manufacturing Overhead   $ 

C.Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation
Debit
Credit

 

Question 2. The ledger of Custer Company has the following work in process account.

Work in Process—Painting
5/1  Balance  3,830   5/31 Transferred out ?
5/31  Materials  5,620       
5/31  Labor  3,650       
5/31  Overhead  1,350       
5/31  Balance  ?      


Production records show that there were 410 units in the beginning inventory, 30% complete, 1,490 units started, and 1,470 units transferred out. The beginning work in process had materials cost of $2,140 and conversion costs of $1,690. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

 

(a) How many units are in process at May 31?

Work in process, May 31  
 units


(b) What is the unit materials cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit materials cost for May  
$


(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit conversion cost for May  
$

(d) What is the total cost of units transferred out in May? (Round answer to 0 decimal places, e.g. 1,225.)

The total cost of units transferred out in May  
$


(e) What is the cost of the May 31 inventory? (Round answer to 0 decimal places, e.g. 1,225.)

Work in process  
$

 

Question 3

 

Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company’s operations.
   
Standard
 
Custom
Direct labor costs   $41,800   $104,000
Machine hours   1,370   1,220
Setup hours   100   400

Total estimated overhead costs are $298,200. Overhead cost allocated to the machining activity cost pool is $198,300, and $99,900 is allocated to the machine setup activity cost pool.
Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.)

Predetermined overhead rate  
 % of direct labor cost
B. Compute the overhead rates using the activity-based costing approach. (Round answers to 2 decimal places, e.g. $12.25.)

Machining  
$
 per machine hour
Machine setup  
$
 per setup hour

Please complete C from Question 1, D and E from Question 2, and B from question 3.

Subject Business
Due By (Pacific Time) 09/22/2013 12:00 pm
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