Reference no: EM13748053
Madison Company manufactures its only product using a single machine that has the capacity to operate 2,000 machine hours a year. This machine is rented at an annual cost of $100,000 and is the company's only manufacturing overhead cost. Madison's product is produced in batches based on customer orders, and the cost of each batch is determined using a job-order costing system with machine hours used to allocate manufacturing overhead cost. The company adds a 20% markup over cost (and rounds to the nearest dollar) to determine the price to the customer. Because of fluctuations in expected demand, the number of machine hours expected to be used each year often changes significantly. The sales department has complained that this results in large changes in product costs and therefore pricing. The controller has suggested using the capacity method to apply overhead as a way to prevent this from happening. At the beginning of this year, it was estimated that 1,724 machine hours would be required for expected orders.
The accounting department is determining the cost for Job 64B below:
Actual Direct Material : $1,025
Actual Direct Labor : $250
Actual Machine Hours Used : 8
Question: If Madison uses the capacity method, by how much will the price increase or decrease for Job 64B compared to the price determined using the traditional method?
A) $64 decrease B) $64 increase C) $77 decrease D) $77 increase E) None
|
Financing-valuation and rating agencies
: Suppose you were given an opportunity to own a business of your choosing. First, briefly describe your business; then explain the most efficient way to raise capital to either start or expand your business. Provide support for your response.
|
|
No journal entry required in the first account field
: John stone Controls had the following situations on December 2016. 1) On March 312016, the company lent $37,000 to another company. A note was signed with principal and interest at 6% payable on March 31, 2017. 2. On September 30, 2016, the company p..
|
|
Companys margin of safety in units
: A company that makes organic fertilizer has provided the following data : The company's margin of safety in UNITS is closest to ?
|
|
What ways religion influence development of medieval europe
: "In what ways did religion and economic influence the development of medieval Europe and Japan?"
|
|
Determined using a job-order costing system
: Madison Company manufactures its only product using a single machine that has the capacity to operate 2,000 machine hours a year. This machine is rented at an annual cost of $100,000 and is the company's only manufacturing overhead cost. Madison's pr..
|
|
How should the proximity of relatives influence
: How might individuals recognize kin and can you think of ways to test whether a particular modality (call, smell, taste, and so forth) is important in kin recognition?
|
|
How would you set about creating a mission statement
: How would you describe the difference between a community health mission and the mission of a hospital or clinic medical facility? How would you set about creating a mission statement for a Community Health Partners Coalition type organization
|
|
How archaeological evidence influence narrative of bible
: What is the relationship between biblical study and archaeology in the articles? How does the archaeological evidence influence the narrative of the Book of Kings 1 within the Bible?
|
|
How will make your own hospital or clinic successful
: How will make your own hospital or clinic successful in recruiting and retaining medical personnel as the Age Wave hits America? Provide specific strategies that you will utilize for this purpose
|