Compute the overhead rate at the two shipyards

Assignment Help Financial Accounting

Reference no: EM131291857

Old Port Shipyards does work for both the U.S. Navy and private shipping companies. Old Port's major business is renovating ships, which it does at one of two company dry docks referred to by the names of the local towns: Olde Town and Newton.

Data on operations and costs for the two dry docks follow:
old town direct labor 200000 & overhead 20000000 for Newtown direct labor 200000& overhead 80000000
Virtually all dry dock costs consist of depreciation. The Newton dry dock is much newer, so the depreciation on it is much higher. Dry dock overhead is charged to jobs based on direct labor-hours for the specific dock.
Page 281

Old Port is about to start two jobs, one for the Navy under a cost-plus contract and one for a private shipping company for a fixed fee. Both jobs will require the same number of hours. You have been asked to prepare some costing information. Your supervisor tells you that she is sure the Navy job will be done at Newton and the private job will be done at Olde Town.
Required

Compute the overhead rate at the two shipyards.

Why do you think your supervisor says that the Navy job will be done at Newton?

Is the choice of the production location ethical? Why?

Reference no: EM131291857

Questions Cloud

Summary using the periodic inventory system : Hall Company has the following merchandise account balances: Sales Revenue $180,000, Sales Discounts $2,000, Purchases $120,000, and Purchases Returns and Allowances $30,000. In addition, it has a beginning inventory of $40,000 and an ending inventor..

Determine net purchases and cost of goods purchased : Assume that Gallant Company uses a periodic inventory system and has these account balances: Purchases $450,000, Purchase Returns and Allowances $13,000, Purchase Discounts $8,000, and Freight-In $16,000. Determine net purchases and cost of goods pur..

Record the necessary adjusting entry : At year-end the perpetual inventory records of Garbo Company showed merchandise inventory of $98,000. The company determined, however, that its actual inventory on hand was $96,500. Record the necessary adjusting entry.

Calculate the ratios with and without the bond issue : Your company's summarized financial information for the beginning and projected end of the current year is as follows: Beginning of the Year End of the Year (projected) Assets $90,000 $100,000 Liabilities 30,000 30,000 Equity 60,000 70,000 Net Income..

Compute the overhead rate at the two shipyards : Old Port Shipyards does work for both the U.S. Navy and private shipping companies. Old Port's major business is renovating ships, which it does at one of two company dry docks referred to by the names of the local towns: Olde Town and Newton. Comput..

Comfort and makes a living selling specialized items : Lucy lives in Comfort and makes a living selling specialized items during various seasons of the year. This winter she plans to sells certain hand-crafted winter outfit. She will buy the outfit from a farmers’ cooperative (“the Co-op”) in a border to..

The pretax net income is : A firm expects to sell 24,800 units of its product at $10.80 per unit and to incur variable costs per unit of $5.80. Total fixed costs are $68,000. The pretax net income is:

Assuming ace uses a perpetual inventory system : During the month of June, Ace Incorporated purchased goods from two suppliers. Prepare journal entries to record the transactions, assuming Ace uses a perpetual inventory system.

Assume that ace uses a perpetual inventory system : During the month of June, Ace Incorporated purchased goods from two suppliers. Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 3..

User Account

All Pages