Foundational 15 Chapter 1 Essay

Overhead costs need to be accounted for this way we can understand just how much cost goes into producing each unit. There are other cost factors that contribute to the product aside from labor and material. Since the projected and the actual sales volumes do not align Kelly should be concerned with the other

6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labor $20,000, and depreciation on factory machinery $8,000.

PROBLEM 5-1. Variable and Full Costing: Sales Constant but Production Fluctuates [LO 1, 2, 3, 5] Spencer Electronics produces a wireless home lighting device that allows consumers to turn on home lights from their cars and light a safe path into and through their homes. Information on the first three years of business is as follows: 2011 Units sold Units produced Fixed production costs Variable production costs per unit Selling price per unit 15,000 15,000 $750,000 $ 150 $ 250 2012 15,000 20,000 $750,000 $ 150 $ 250 $220,000 2013 15,000 10,000 $750,000 $ 150 $ 250 $220,000 Total 45,000 45,000

12) Suppose a firm has $1500 in variable costs and $500 in fixed costs when it produces 500

Blanco Company estimates that its variable manufacturing overhead (all requiring cash expenditures) is $32 per direct labor hour. The total fixed manufacturing overhead of $1,881,120 per month includes depreciation on the factory building of $120,000 per month and depreciation on the factory equipment of $30,000 per month for total depreciation of $150,000 per month. (Thus, the cash spent for fixed manufacturing overhead is $1,731,120 ($1,881,120 – $120,000 – $30,000) per month.) Cash disbursements for manufacturing overhead occur in the same month in which the company incurs the cost. Be sure to show the calculation of the average predetermined overhead rate for the quarter as a whole only—total budgeted manufacturing overhead cost

$ 4,000 8 Purchase 800 units @ $10.40 = 8,320 16 Purchase 600 units @ $10.80 = 6,480 24 Purchase 200 units @ $11.60 = 2,320 2,000 $21,120 Required: (a) Calculate the ending inventory using FIFO assuming 400 units remain on hand at May 31. (show calculations) (b) Calculate the ending inventory using average cost assuming 400 units remain on hand at May 31. (show calculations) Part E (10

Hannon Company expects to produce 1,200,000 units of Product XX in 2010. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are: direct materials $4, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. Complete the flexible manufacturing budget for the relevant range value using 20,000 unit increments.

2. Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute:

15. Murphy Company has two service departments, Maintenance and Personnel, and two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year:

3) Using the budget Data, what was the total expected cost per unit if all manufacturing and shipping overhead (both variable and fixed) were allocate to planned production? What was the actual cost per unit of production and shipping?

1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing

d) If Tyler is estimating a gross profit margin, or contribution margin, of 40 percent, how much of the receivables balance must actually

Lee wasn’t sure why cost of goods sold per unit should fall, because, after all, the efficiency and

Assumption 1: The excess capacity stated allows for 3000 of each unit to be produced the costs of each are as follows.

Overhead per unit = Total Overhead/Total number of units = $15,400/110 = $140 Cost per unit of each product ($): Product Direct material Direct labour Overhead Total cost per unit Selling price (20% margin) X 80 15 140 235 294 Y 20 5 140 165 206