Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Cristin is an new controller at Solequin Corp. She was asked to develop the predetermined overhead rate for the upcoming year. The accuracy of the rate is important because it is used throughout the year and any underapplied or overapplied overhead is closed out to Cost of Goods Sold at the end of the year. Solequin uses direct labor hours in all of its divisions as the allocation base for manufacturing overhead.
To compute the predetermined overhead rate, Cristin divided her estimate of the total manufacturing overhead for the coming year by the production manager's estimate of the total direct labor hours for the coming year. She took her computations to the division's general manager for approval but was quite surprised when he suggested a modification in the base. Her conversation went like this: Cristin: Here are my calculations for next year's predetermined overhead rate. GM: Thanks, they look fine. I do have a modification. Your estimate of the direct labor hours for the year is 110,000 hours. How about cutting that to about 105,000 hours? Cristin: I don't know if I can do that. The production manager says she will need about 110,000 direct labor hours to meet the sales projections for next year. Besides, there are going to be over 108,000 direct labor hours during the current year and sales are projected to be higher next year. GM: I know that, I would still like to reduce the direct labor hours in the base to 105,000. I had an agreement with your predecesor to shave 5% or so off the estimated direct labor hours every year. That way, we kept a reserve that usually resulted in a big boost to net operating income at the end of the year. We called it our Christmas Bonus. Corporate has always been very happy about it.
1. Explain how shaving 5% off the estimated direct labor hours in the base of the predetermined overhead rate usually results in a big boost in the net operating income at the end of the year.
2. Should Cristin go along with the general manager's request to reduce the direct labor hours in the computation?
The pretax operating income of the division during 2011 was $4 million. Pretax income from continuing operations for the year totaled $14 million. The income tax rate is 40%. Ziltech reported net income for the year of $7.2 million. Determine the ..
Could you explain the importance of maintaining accurate records in regard to income, expenses, profit, budgeting, and forecasting for a restaurant?
1. In 2014, James invested $30,000 in a cattle - feeding partnership that used non recourse notes to purchase $70,000 of feed, which was used to feed the cattle and expensed. If James's share of the expense was
What are some strategies that a taxpayer can employ to increase the at-risk amount in order to claim a higher deduction for losses?
Allocate joint costs to the two products using the relative sales value to split off as the allocation basis.
What are some differences between internal and external auditors? And in your organization who audits your financial's statements? Or a company you are familiar with? Are you involved in either type of audit process?
a. What costs are relevant to the decision to accept this special order? b. What would be the dollar effect on pre-tax income if this order were accepted?
Race decided to use the equity method to account for this investment. What was the non-controlling interest's share of consolidated net income?
How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?
The Fitzgerald Company maintains a checking account at the Bank of the North. The bank provides a bank statement along with canceled checks on the last day of each month. Prepare a bank reconciliation for the month of October. Prepare the necessary..
The board of directors declared and paid a $3,000 dividend in 2009. In 2010, $12,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2010?
Casso limited has an option to purchase new car for the use from a bank on loan for Rs. 100,000 with 16% interest payable annually and the principal is repayable in full at the end of four years.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd