Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures specialty blocks. CB uses two direct cost categories: direct materials and direct manufacturing labour. Johnson feels that manufacturing overhead is most closely related to material usage. Therefore, CB allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the following standards for each block:
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- Young Company is beginning operations and is considering three alternatives to allocate manufacturing overhead to individual units produced. Young can use a plantwide rate, departmental rates, or activity-based costing. Young will produce many types of products in its single plant, and not all products will be processed through all departments. In which one of the following independent situations would reported net income for the first year be the same regardless of which overhead allocation method had been selected? a. All production costs approach those costs that were budgeted. b. The sales mix does not vary from the mix that was budgeted. c. All manufacturing overhead is a fixed cost. d. All ending inventory balances are zero.Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiners master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employers share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the companys union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 5,600 glare filters in inventory on December 31 of the current year, and has a policy of carrying 35 percent of the following month's projected sales in inventory. Information on the first four months of the coming year is as follows: Required: 1. Prepare the following monthly budgets for Greiner Company for the first quarter of the coming year. Be sure to show supporting calculations. a. Production budget in units b. Direct labor budget in hours c. Direct materials cost budget d. Sales budget 2. Calculate the total budgeted contribution margin for Greiner Company by month and in total for the first quarter of the coming year. Be sure to show supporting calculations. (CMA adapted)Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of 168,000 for next year. Service Department 2 has total budgeted costs of 280,000 for next year. Minor allocates service department costs solely to the producing departments. Service Department 1 cost is allocated to producing departments on the basis of machine hours. Service Department 2 cost is allocated to producing departments on the basis of direct labor hours. Producing Department 1 has budgeted 8,000 machine hours and 12,000 direct labor hours. Producing Department 2 has budgeted 2,000 machine hours and 12,000 direct labor hours. What is the total cost allocation from the two service departments to Producing Department 1? a. 173,600 b. 140,000 c. 134,400 d. 274,400
- Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?Don Johnson is the management accountant for Cari-Blocks (CB), which manufacturesspecialty blocks. CB uses two direct cost categories: direct materials and directmanufacturing labour. Johnson feels that manufacturing overhead is most closely related tomaterial usage. Therefore, CB allocates manufacturing overhead to production based uponpounds of materials used.At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted thefollowing standards for each block: Direct materials 0.5 lb. @ $12/lb. $ 6.00Direct manufacturing labour 1.4 hours @ $20/hour 28.00Manufacturing overhead:Variable $6/lb. 0.5 lb. 3.00Fixed $15/lb. 0.3 lb. 4.50Standard cost per block $41.50Actual results for April 2021 were as follows:Production 24,000 blocksDirect materials purchased 12,000 lb. at $13/lb.Direct materials used 11,450 lb.Direct manufacturing labour 38,000 hours for $798000Variable manufacturing overhead $68,150Fixed manufacturing overhead $155,000 calculate: For the month of…
- Don Johnson is the management accountant for Cari-Blocks (CB), which manufacturesspecialty blocks. CB uses two direct cost categories: direct materials and directmanufacturing labour. Johnson feels that manufacturing overhead is most closely related tomaterial usage. Therefore, CB allocates manufacturing overhead to production based uponpounds of materials used.At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted thefollowing standards for each block: Input Cost/BlockDirect materials 0.5 lb. @ $12/lb. $ 6.00Direct manufacturing labour 1.4 hours @ $20/hour 28.00Manufacturing overhead:Variable $6/lb. 0.5 lb. 3.00Fixed $15/lb. 0.3 lb. 4.50Standard cost per block $41.50Actual results for April 2021 were as follows:Production 24,000 blocksDirect materials purchased 12,000 lb. at $13/lb.Direct materials used 11,450 lb.Direct manufacturing labour 38,000 hours for $798000Variable manufacturing overhead $68,150Fixed manufacturing overhead $155,000 1) Prepare a…Don Johnson is the management accountant for Cari-Blocks (CB), which manufacturesspecialty blocks. CB uses two direct cost categories: direct materials and directmanufacturing labour. Johnson feels that manufacturing overhead is most closely related tomaterial usage. Therefore, CB allocates manufacturing overhead to production based uponpounds of materials used.At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted thefollowing standards for each block:Direct materials 0.5 lb. @ $12/lb. $ 6.00Direct manufacturing labour 1.4 hours @ $20/hour 28.00Manufacturing overhead:Variable $6/lb. 0.5 lb. 3.00Fixed $15/lb. 0.3 lb. 4.50Standard cost per block $41.50Actual results for April 2021 were as follows:Production 24,000 blocksDirect materials purchased 12,000 lb. at $13/lb.Direct materials used 11,450 lb.Direct manufacturing labour 38,000 hours for $798000Variable manufacturing overhead $68,150Fixed manufacturing overhead $155,000 CALCULATE: .a. Direct…Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures specialty blocks. CB uses two direct cost categories: direct materials and direct manufacturing labour. Johnson feels that manufacturing overhead is most closely related tomaterial usage. Therefore, CB allocates manufacturing overhead to production based upon pounds of materials used.At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the following standards for each block: Input Cost/BlockDirect materials 0.5 lb. @ $12/lb. $ 6.00Direct manufacturing labour 1.4 hours @ $20/hour 28.00Manufacturing overhead:Variable $6/lb. 0.5 lb. 3.00Fixed $15/lb. 0.3 lb. 4.50Standard cost per block $41.50Actual results for April 2021 were as follows:Production 24,000 blocksDirect materials purchased 12,000 lb. at $13/lb.Direct materials used 11,450 lb.Direct manufacturing labour 38,000 hours for $798000Variable manufacturing overhead $68,150Fixed manufacturing overhead $155,000…
- Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures specialty blocks. CB uses two direct cost categories: direct materials and direct manufacturing labour. Johnson feels that manufacturing overhead is most closely related tomaterial usage. Therefore, CB allocates manufacturing overhead to production based upon pounds of materials used.At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the following standards for each block: Input Cost/BlockDirect materials 0.5 lb. @ $12/lb. $ 6.00Direct manufacturing labour 1.4 hours @ $20/hour 28.00Manufacturing overhead:Variable $6/lb. 0.5 lb. 3.00Fixed $15/lb. 0.3 lb. 4.50Standard cost per block $41.50Actual results for April 2021 were as follows:Production 24,000 blocksDirect materials purchased 12,000 lb. at $13/lb.Direct materials used 11,450 lb.Direct manufacturing labour 38,000 hours for $798000Variable manufacturing overhead $68,150Fixed manufacturing overhead $155,000…Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures specialty blocks. CB uses two direct cost categories: direct materials and direct manufacturing labour. Johnson feels that manufacturing overhead is most closely related tomaterial usage. Therefore, CB allocates manufacturing overhead to production based upon pounds of materials used.At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the following standards for each block: Input Cost/BlockDirect materials 0.5 lb. @ $12/lb. $ 6.00Direct manufacturing labour 1.4 hours @ $20/hour 28.00Manufacturing overhead:Variable $6/lb. 0.5 lb. 3.00Fixed $15/lb. 0.3 lb. 4.50Standard cost per block $41.50Actual results for April 2021 were as follows:Production 24,000 blocksDirect materials purchased 12,000 lb. at $13/lb.Direct materials used 11,450 lb.Direct manufacturing labour 38,000 hours for $798000Variable manufacturing overhead $68,150Fixed manufacturing overhead $155,000…Don Johnson is the management accountant for Cari-Blocks (CB), which manufactures specialty blocks. CB uses two direct cost categories: direct materials and direct manufacturing labour. Johnson feels that manufacturing overhead is most closely related to material usage. Therefore, CB allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2021, CB budgeted annual production of 200,000 blocks and adopted the following standards for each block: Input Cost/Block Direct materials 0.5 lb. @ $12/lb. $6.00 Direct manufacturing labour 1.4 hours @ $20/hour $28 Manufacturing overhead: Variable $6/lb. 0.5 lb. $3 Fixed $15/lb. 0.3 lb. $4.50 Standard cost per block $41.50 Actual results for April 2021 were as follows: Production 24,000 blocks Direct materials purchased 12,000 lb. at $13/lb. Direct materials used 11,450 lb. Direct manufacturing labour 38,000 hours for $798000 Variable manufacturing…