Concept explainers
1.
Prepare
1.
Explanation of Solution
Budgeted overhead allocation rate: The budgeted overhead allocation rate is the rate at which the overhead is allocated. This is calculated by dividing the total fixed and variable overheads cost by the base of the allocation.
Prepare job cost sheets for M Products and R Markets.
M Products | R Markets | |
Professional labor cost: | ||
50 hours×$60 (1) | $3,000 | |
20 hours×$60 (1) | $1,200 | |
Professional support: | ||
50 hours×$40 (2) | 2,000 | |
20 hours×$40 (2) | 800 | |
Total | $5,000 | $2,000 |
Working Note (1):
Compute the cost of professional labor per hour.
Working Note (2):
Computed the cost of professional support per hour.
2.
Prepare job cost sheets for the two clients.
2.
Explanation of Solution
Prepare job cost sheets for the two clients.
M Products | R Markets | |
Professional labor cost: | ||
30 hours×$100 (3) | $3,000 | |
5 hours×$100 (3) | $500 | |
Associate labor cost: | ||
20 hours×$40 (4) | 800 | |
15 hours×$40 (4) | 600 | |
Design support: | ||
$3,800×.22 (5) | 836 | |
$1,100×.22 (5) | 242 | |
Staff support: | ||
50 hours×$26.67 (6) | 1,334 | |
20 hours×$26.67 (6) | 533 | |
Total | $5,970 | $1,875 |
Working Note (3):
Compute the cost of partner labor per hour.
Working Note (4):
Computed the cost of associate labor per hour.
Working Note (5):
Computed the cost of design support per partner and associate.
Working Note (6):
Computed the cost of staff support per partner and associate.
Want to see more full solutions like this?
Chapter 9 Solutions
Principles of Cost Accounting
- Alvarez Manufacturing Inc. is a job shop. The management of Alvarez Manufacturing Inc. uses the cost information from the job sheets to assess cost performance. Information on the total cost, product type, and quantity of items produced is as follows: a. Develop a graph for each product (three graphs), with Job Number (in date order) on the horizontal axis and Unit Cost on the vertical axis. Use this information to determine Alvarez Manufacturing Inc.s cost performance over time for the three products. b. What additional information would you require in order to investigate Alvarez Manufacturing Inc.s cost performance more precisely?arrow_forwardCarltons Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity-based costing method (Hint: the traditional method uses machine hours as the allocation base.)arrow_forwardJob order cost sheets show the following costs assigned to each job: The company assigns overhead at twice the direct labor cost. What is the total cost for each job?arrow_forward
- Potterii sells its products to large box stores and recently added a retail line of products to sell directly to consumers. These estimates are to be used in determining the overhead allocation rate for ABC: What would be the predetermined rate for each cost pool?arrow_forwardFrenchys has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: What is the predetermined overhead rate for each activity?arrow_forwardCaseys Kitchens three cost pools and overhead estimates are as follows: Compare the overhead allocation using: A. The traditional allocation method B. The activity based costing method (Hint: the traditional method uses machine hours as the allocation base.)arrow_forward
- A job-order costing system that relies on normal costing will: Multiple Cholce Apply overhead cost to Jobs by multiplying a predetermined overhead rate by the estimated amount of the allocation base Incurred by the jobs. Assign actual direct materlals and direct labor costs to jobs. Apply overhead cost to Jobs by multiplylng an actual overhead rate by the estimated amount of the allocation base incurred by the jobs. Apply overhead cost to Jobs by multiplylng an actual overhead rate by the actual amount of the allocation base Incurred by the Jobs.arrow_forwardCost Flows Consider the following independent jobs. Overhead is applied in Department 1 at the rate of $6 per direct labor hour. Overhead is applied in Department 2 at the rate of $8 per machine hour. Direct labor wages average $10 per hour in each department. Required: Fill in the missing data for each job. If an amount box does not require an entry, leave it blank or enter zero ("0"). If required, round your answers to two decimal places. Job 213 Job 214 Job 217 Job 225 Total sales revenue $fill in the blank 1 $4,375 $5,600 $1,150 Price per unit $12 $fill in the blank 2 $14 $5 Materials used in production $365 $fill in the blank 3 $488 $207 Department 1, direct labor cost $fill in the blank 4 $700 $2,000 $230 Department 1, machine hours 15 35 50 12 Department 2, direct labor cost $50 $100 $fill in the blank 5 $0 Department 2, machine hours 25 50 fill in the blank 6 fill in the blank 7 Department 1, overhead applied $90 $fill in the blank 8 $1,200 $138…arrow_forwardsolve questions d,e,f from the question given in the image. Bella Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours. Remaining question is in the images provided.arrow_forward
- Calculate the overhead allocated to each customer using the simple costing method. (Round your answers to the nearest whole dollar.arrow_forward1. Calculate the overhead rate based on the traditional overhead allocation method using direct labour hours as the base. 2. Calculate the total overhead applied to order no. 147 using the traditional overhead rate calculated in question 3.1 above. 3. Using activity based costing (ABC), calculate the overhead rate for the following activity: Purchasing. That is, what is the overhead rate per purchase order?arrow_forwardThe current cost accounting system charges overhead to products based on machine-hours. What unit product costs will be reported for the two products if the current cost system continues to be used? (Round intermediate calculations and "Per unit cost" answers to 2 decimal places.) 308 510 Total cost Per unit cost A consulting firm has recommended using an activity-based costing system, with the activities based on the cost pools identified by the cost accountant. What are the cost driver rates for the four cost pools identified by the cost accountant? (Round your answers to 2 decimal places.) Incoming inspection % of material dollars Production per machine-hour Machine setup per setup Shipping per unit What unit product costs will be reported for the two products if the ABC system suggested by the cost accountant’s classification of…arrow_forward
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub