Reference no: EM131327876

Assignment

Part 1

Use the following data for questions 1 and 2.

Fox Company manufactures a specialty line of belts. The company uses a job-order costing system. Cost detail for the job follow:

Units produced 5,000 belts
Direct materials in the amount of $43,000
Direct labor in the amount of $18,500.
The POUR was $25.00 per machine-hour (MH) and $ 10,000
Job A 10 required 400 MHs. k

Selling and G & A expenses of $23,000 were incurred for the month.

1. By the end of the month Fox had sold 4,000 of these belts and overhead was over applied by a total of $5,000. The cost of goods sold for the month, computed using the direct method (including any necessary adjusting entry for over or under applied overhead) was:
A) $75,200
B) $71,500
C) $57,200
D) $52,200

2. The value of the 1,000 units remaining in Finished Goods inventory is
A. $13,050
B. $14,300
C. $61,500
D. $71,500

3. Lizzie's Riverside Grill compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are more than budget, the restaurant would usually report unfavorable variances on: (Hint these variances are Actual results vs. a Static budget.)
A) fixed supervisory salaries and variable food costs.
B) variable food costs but not fixed supervisory salaries.
C) fixed supervisory salaries but not variable food costs
D) neither fixed supervisory salaries or variable food costs

4. A company's static budget estimate of total overhead costs was $600,000 based on the assumption that 40,000 units would be produced and sold. The company estimates that 50% of its overhead is variable and the remainder is fixed. What would be the total overhead cost according to the flexible budget if 45,000 units were produced and sold?
A) $300,000
B) $337,500
C) $566,667
D) $637,500
E) $600,000

5. If the actual cost incurred is less than what the cost should have been as set forth in the flexible budget, the variance is:
A) labeled as favorable.
B) labeled as unfavorable.
C) cannot be labeled as favorable or unfavorable without obtaining an explanation.
D) an activity variance.

6. Jones Inc. planned to use $150 of material per unit but actually used $147 if of material per unit, and planned to make 1,100 units but actually made 900 units. The flexible-budget amount for materials is
A) $161,700
B) $135,000
C) $165,000
D) 132,300

7. Holy Hospital bases its budgets on patient-visits. The hospitals static budget for October appears below:

Budgeted number of patient-visits 8,000
Budgeted variable costs:
Supplies (@$9.00 per patient-visit) $72,000
Laundry (@$8.70 per patient-visit) 69.600
Total variable costs 141,600
Budgeted fixed costs:
Wages and salaries 101,500
Occupancy costs 75,000
Total fixed cost 176,500
Total operating costs $318,100

7. The total operating cost at the activity level of 8,500 patient-visits per month should be:
A. $326,950
B. $176,500
C. $150,450
D. $318,100

Use the following information for questions 8 -11.

King Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $49,340 per month plus $2,635 per flight plus $2 per passenger. The company expected its activity in January to be 73 flights and 191 passengers, but the actual activity was 75 flights and 193 passengers. The actual cost for plane
operating costs in January was $246,440.

8. The plane operating costs in the planning (static) budget for January would be:
A. $247,351
B. $246,440
C. $239,868
D. $242,077

9. The plane operating costs in the flexible budget for January would be:
A. $246,440
B. $247,351
C. $248,709
D. $242,077

10. The activity variance for plane operating costs in January would be
A. $5,274 F
B. $4,363 U
C. $4,363 F
D. $5,274 U

11. The spending variance for plane operating costs in January would be
A. $911 U
B $911 F
C $4,363 F
D $4,363 U

Part II

Problem I Prepare a Flexible Budget, and Calculate Variances

Zindell Corporation bases its budgets on the activity measure customers served. During December, the company planned to serve 21,000 customers but actually served 19,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served.

Revenue : $3.60q
Wages and salaries: $21,300 + $1.10q
Supplies : $0.70q
Insurance: $6,400
Miscellaneous: $3,200 + $0.20q

Required: Prepare a report showing the company's static budget, flexible budget, and activity variances for December. Indicated in each case whether the variance is favorable (F) or unfavorable (U). A format has been provided for you

Problem II Job-Order Costing and Departmental Overhead Rates

Joy Enterprises (JYE) uses a job-costing system that requires the annual calculation of predetermined rates for its manufacturing overhead costs. Most jobs completed by DCE involve production activities in two departments, Machining and Assembly. Selected budgeted and actual data for 2015 are presented below as well as cost data for a particular job, #K-326, that was started and completed during 2015.

Assume that JYE calculates departmental manufacturing overhead rates in each of its two production departments. In Machining, the allocation base for manufacturing overhead in machine hours; in Assembly, the allocation base for manufacturing overhead is direct labor hours.

Required: SHOW YOUR WORK ( parts 2 and 3 on next page)

1. Compute the predetermined manufacturing overhead rate for each of the two production departments

2. Using the budgeted overhead rates calculated in Requirement I and other relevant data above, calculate the total cost of Job K-326 as well as the cost per unit for the job

3. What is the amount of over or under-applied overhead for each of the two production departments and for JYE as a whole? Be sure to label all results as either over or under-applied.