Reference no: EM132463087
Marblex manufactures marble statues. In March, the two production departments had 46)
budgeted allocation bases of 4,000 machine-hours in Department X and 8,000 direct manufacturing labor-hours in Department Y. The budgeted manufacturing overheads for the month were $60,000 and $64,000, respectively. For Job A, the actual costs incurred in the two departments were as follows:
Job A incurred 800 machine-hours in Department X and 300 manufacturing labor-hours in Department Y. The company uses a budgeted overhead rate for applying overhead to production.
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Department X
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Department Y
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|
Direct materials purchased on account
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$110,000
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$177,500
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|
Direct materials used
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40,000
|
13,500
|
|
Direct manufacturing labor
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55,000
|
53,500
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|
Indirect manufacturing labor
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11,000
|
9,000
|
|
Indirect materials used
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5,000
|
4,750
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|
Lease on equipment
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16,250
|
3,750
|
|
Utilities
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1,000
|
1,250
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Required:
Question a. Determine the budgeted manufacturing overhead rate for each department.
Question b. Prepare the necessary journal entries to summarize the March transactions for Department X.
Question c. What is the total cost of Job A?
Rachel's Pet Supply Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:
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Number of
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Number of
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Number of
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Product
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Setups
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Components
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Direct Labor Hours
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Standard
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3
|
30
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650
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|
Deluxe
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7
|
50
|
150
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Overhead costs
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$40,000
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$120,000
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|
Assume a traditional costing system applies the $160,000 of overhead costs based on direct labor hours.
Question a. What is the total amount of overhead costs assigned to the standard model?
Question b. What is the total amount of overhead costs assigned to the deluxe model?
Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.
Question c. What is the total amount of overhead costs assigned to the standard model?
Question d. What is the total amount of overhead costs assigned to the deluxe model?
Question e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why?