Reference no: EM13849522

Task 1-

The following information is available for Deutsch Corporation for 2010:

Inventorlos                     January 1	December 31
Materials                            $225.000	5280.000
Work in process                   405.000	380.000
Finished goods                     390.000	390.000
Advenising expense	190.000
Depredation expense-office abutment	27.000
Depredation expense-factory equipment	36.000
Direct labor	430.000
Heat light, and power-factory	14,400
[Direct labor	50.400
Materials purchased	423,000
Office salaries expense	147,500
Property taxes-factory	11,700
Property taxes-office building	24,300
Rent expense-factory	19.800
Sales	1.990.000
Sales salaries expense	243.000
Supplies-factory	9.900
Miscellaneous cost-factory	6.120

Instructions

1. Prepare the 2010 statement of cost of goods manufactured.

2. Prepare the 2010 income statement.

Task 2-

If the working papers correlating with the textbook are not used, omit Problem 2-313.

Terry Furniture Company refinishes and reupholsters furniture. Terry uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On June I, 2010, an estimate of $1,087.80 for reupholstering two chairs and a couch was given to Ted Austin. The estimate was based on the following data:

Estimated direct matenals:

24 Meters at 514 per Mater ...................................................... 336.00

Estimated direct labor

14 hours at $18 per hour ........................................................ 25200

Estimated factory overhead 175% of direct labor cost)................ 189.00

Total estimated costs .............................................................. $ 777.00

Markup 140% of production costs)............................................ 310.80

Total estimate  ....................................................................... $1 ,087.80

On June 4, the chairs and couch were picked up from the residence of Ted Austin, 409 Patterson St., Vienna, with a commitment to return them on August 5. The job was completed on August 2.

The related materials requisitions and time tickets are summarized as follows:

Materials Requisition No.	Description	Amount
210	10 meters at $14	$140
212	16 meters at $14	224
Time Ticket No.	Description	Amount
H16	6 hours at $18	$108
H21	10 hours  at $14	180

Instructions

1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.

2. a- Assign number 10-110 to the job, record the costs incurred, and complete the job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that two meters of materials were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.

Task 3-

Gwinnett Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

Activity	Activity Cost Pool
Production	$ 495000
Setup	225,000
Moving	29,750
Shipping	126.000
Product engineering	150.000
Total	51.025.750

The activity bases identified for each activity are as follows:

Activity	Activity Base
Production	Machine hours
Setup	Number of setups
Moving	Number of moves
Shipping	Number of customer orders
Product engineering	Number of test runs

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

	Machine hours	Number of setups	Number of moves	Number of customer orders	Number of test runs	Units
Computer paper	900	130	290	440	90	1.000
Newsprint	1.125	60	130	135	20	1.250
Specialty paper	450	310	430	625	140	500
Total	2.475	500	650	1200 in.	250	2.750

Each product requires 0.9 machine hour per unit.

Instructions

1. Determine the activity rate for each activity.

2. Determine the total and per-unit activity cost for all three products.

3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit?