Reference no: EM133065780
Question 1 - Wilmington Company has two manufacturing department-Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year-Job Bravo.
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Estimated Data
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Assembly
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Fabrication
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Total
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Manufacturing overhead cost
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$3,200,000
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$3,600,000
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$6,800,000
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Direct Labor-hours
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100,000
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60,000
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160,000
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Machine-hours
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40,000
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200,000
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240,000
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Job Bravo
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Assembly
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Fabrication
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Total
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Direct labor-hours
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21
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13
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34
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Machine-hours
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13
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16
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29
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a) If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo?
b) If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Bravo?
Question 2 - Speedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics' hourly wages. Speedy's overhead costs include various items, such as the shop manager's salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room.
The company applies all of its overhead costs to job based on direct labor-hours. At the beginning of the year, it made the following estimates:
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Direct labor-hours required to support estimated output
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10,000
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Fixed overhead cost
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$90,000
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Variable overhead cost per direct labor-hour
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$1.00
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a) Compute the predetermined overhead rate.
b) During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job:
Direct materials $600
Direct labor cost $180
Direct labor- hours used 2
Compute Mr. Wilkes' total job cost.
c) If speedy establishes its selling price using a markup percentage of 30% of its total job cost, then how much would it have charged Mr. Wilkes?
Question 3 - Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations:
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Variable costs per unit:
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Manufacturing:
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Direct materials
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$23
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Direct labor
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$15
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Variable manufacturing overhead
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$6
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Variable selling and administrative fixed cost per year
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$1
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Fixed manufacturing overhead
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$240,000
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Fixed selling and administrative expenses
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$180,000
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During its first year of operations, Haas produced 60,000 units and sold 60, 000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit.
a) Compute the company's break-even point in unit sales.
b) Assume the company uses variable costing:
1. Compute the unit product cost for Year 1, Year 2, and Year 3.
2. Prepare an income statement for Year 1, Year 2, and Year 3.
3. Assume the company uses absorption costing:
1) Compute the Unit product cost for Year 1, year 2, Year 3.
2) Prepare an income statement for Year 1, Year 2, and Year 3.