Reference no: EM13849312
1. Count-Me-In Inc. manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2014, the following estimates were provided for the coming year:
Machining Assembly
Direct labor-hours (DLH) 10,000 DLH 150,000 DLH
Machine-hours (mh) 100,000 MH 5,000 mh
Direct labor costs $90,000 $720,000
Manufacturing OH costs $200,000 $450,000
The accounting records of the company show the following data for Job #897.
Machining Assembly
Direct labor-hours (DLH) 50 DLH 120 DLH
Machine-hours (mh) 170 mh 10 mh
Direct material cost $3,000 $1,600
Direct labor costs $400 $1,500
Required:
a) Compute the manufacturing overhead allocation rate for each department.
b) Compute the total cost of Job #897.
c) Provide possible reasons why Count-Me-In Inc. Manufacturing uses two different allocated rates.
2.The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2010:
Beginning Ending
Inventories:
Raw materials $17,000 $19,000
Work in process 9,000 14,000
Finished goods 11,000 8,000
Total $37,000 $41,000
In addition, the following transactions occurred in 2010:
1. Raw materials purchased on account, $75,000.
2. Incurred factory labor, $90,000, all is direct labor. (Credit Factory Wages Payable).
3. Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on Manufacturing machinery $8,000, manufacturing machinery repairs $9,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation).
4. Assigned $90,000 of factory labor to jobs.
5. Applied $36,000 of overhead to jobs.
Instructions
(a) Journalize the above transactions.
(b) Reproduce the manufacturing cost and inventory accounts. Use T-accounts.
(c) From an analysis of the accounts, compute the following:
1. Raw materials used.
2. Completed jobs transferred to finished goods.
3. Cost of goods sold.
4. Under- or over applied overhead.
3.The Jungle Treasures Company is noted for an exceptionally impressive line of Safari equipment. Jungle Treasures has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2015:
Activity Cost Cost driver
Marketing $ 150,000 $1,250,000 of sales
Customer service 50,000 10,000 customers
Order execution 15,000 200 orders
Warehousing 15,000 125 product lines
Required:
a. Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b. Under what circumstances is it appropriate to use each of the activity-cost drivers?
c. Describe at least one possible negative behavioral consequence for each of the four activity cost drivers.