Homework (15,16,1718)
Name Professor Hanae Benaly
Exercise 1
Calwell Corp. uses a job order costing system. Four jobs were started during the current year. The following is a record of the costs incurred:
Job #
Material
Used
Direct Labor
Used
Direct Labor
Hours Used
1010
$45,000
$72,000
8,000
1011
59,000
77,000
7,000
1012
35,000
30,000
3,000
1013
26,000
40,000
5,000
Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013 were sold for $387,000. Assuming that this is Calwell’s first year of operations:
(a) Make the necessary journal entries to charge the costs to the jobs started and to record the completion and sale of finished jobs.
(b) Calculate the balance in the Work in Process Inventory, Finished Goods Inventory, and Factory Overhead accounts. Does the Factory Overhead account balance indicate an over- or underapplied overhead?
Exercise 2
Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFOmethod of inventory costing.
Beginning Work in Process inventory:
Physical units…………………………………………… 5,000 units
% complete for materials………………………………. 70%
% complete for labor and overhead……………………. 25%
Materials cost from May……………………………….. $7,350
Labor and overhead cost from May……………………. $3,125
Product started and completed:
Physical units…………………………………………… 40,000 units
Ending Work in Process inventory:
Physical units……………………………………………. 4,000 units
% complete for materials………………………………. 40%
% complete for labor and overhead ……………………. 10%
Manufacturing costs for June:
Materials………………………………………………… $96,975
Labor and overhead……………………………………… $79,470
Compute equivalent units for direct materials, direct labor and overhead for June.
Exercise 3
Fischer Company identified the following activities, costs, and activity drivers:
Activity
Expected Costs
Expected Activity
Handling parts
$425,000
25,000 parts in stock
Inspecting product
$390,000
940 batches
Processing purchase orders
$220,000
440 orders
Designing packaging
$230,000
5 models
a. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
b. Compute separate rates for each of the four activities using the activity-based costing.
Exercises 4
Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below.
Freeze Frame’s total expected overhead costs and related overhead data are shown below:
a. Compute a departmental overhead rate for department A based on direct labor hours.
b. How much overhead is associated with model 789 from department A?
c. Compute a departmental overhead rate for department B based on direct labor hours.
d. How much overhead is associated with model 789 from department B?
e. Compute a departmental overhead rate for department C based on direct labor hours.
f. How much overhead is associated with model 789 from department C?
g. What is the per unit cost of the 550,000 units of model 789?
Exercise 5
Magnolia Company is considering the production and sale of a new product with the following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs, $399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.
(a) Calculate break-even in units.
(b) Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).
(c) Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.
(d) Calculate dollar sales that would be needed to generate the same profit as above.
(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.
Be sure to label each calculation and show all calculations.
