assignment 2 questions by 5vx06o8

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									                         COST ACCOUNTING BUS224
                              ASSIGNMENT 2

Student Name:
Student ID:                                                    Submission Date:



[Note: Please answer all the questions in the space provided. Only handwritten work will be
considered. So first take a printout of the blank Questions and then work out the problems
manually.
The below questions are from Chapter 4, 5 and 6 only. And the Submission deadline is week
14 Wednesday. ]




1. For 2010, Jake's Dog Supply Manufacturing uses machine-hours as the only overhead
   cost-allocation base. The accounting records contain the following information:

                                        Estimated        Actual
   Manufacturing overhead costs         $200,000       $240,000
   Machine-hours                          40,000         50,000

a) Using job costing, the 2010 actual indirect-cost rate is:




b) Using actual costing, the amount of manufacturing overhead costs allocated to jobs
   during 2010 is:
   c) Using job costing, the 2010 budgeted manufacturing overhead rate is:




   d) Using normal costing, the amount of manufacturing overhead costs allocated to jobs
      during 2010 is:




   2. Apple Valley Corporation uses a job cost system and has two production departments, A
      and B. Budgeted manufacturing costs for the year are:

                                        Department A      Department B
       Direct materials                   $700,000          $100,000
       Direct manufacturing labor         $200,000          $800,000
       Manufacturing overhead             $600,000          $400,000

The actual material and labor costs charged to Job #432 were as follows:

                                            Total
       Direct materials:                   $25,000
       Direct labor:
          Department A                      $ 8,000
          Department B                     $12,000
                                           $20,000

Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing
labor cost using departmental rates determined at the beginning of the year.




   a. For Department A, the manufacturing overhead allocation rate is:
b. For Department B, the manufacturing overhead allocation rate is:




c. Manufacturing overhead costs allocated to Job #432 total:




d. Total Cost of the job:




e. Price to be quoted at 30% mark up:
   3. Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing
      overhead costs to products. Manufacturing overhead costs are allocated on the basis of
      machine-hours in the Machining Department and on the basis of direct labor-hours in the
      Assembly Department. At the beginning of 20X3, the following estimates were provided
      for the coming year:

                                         Machining      Assembly
       Direct labor-hours                  30,000        60,000
       Machine-hours                       80,000        20,000
       Direct labor cost                 $500,000      $900,000
       Manufacturing overhead costs      $420,000      $240,000

The accounting records of the company show the following data for Job #316:

                                         Machining      Assembly
       Direct labor-hours                    120             70
       Machine-hours                          60              5
       Direct material cost                 $300           $200
       Direct labor cost                    $100           $400

   a. For Bauer Manufacturing, what is the annual manufacturing overhead cost-allocation rate
      for the Machining Department?




   b. What amount of manufacturing overhead costs will be allocated to Job #316?
   4. Jordan Company has two departments, X and Y. Overhead is applied based on direct
      labor cost in Department X and machine-hours in Department Y. The following
      additional information is available:

       Budgeted Amounts              Department X       Department Y
       Direct labor cost             $180,000           $165,000
       Factory overhead              $225,000           $180,000
       Machine-hours                   51,000 mh          40,000 mh

       Actual data for Job #10       Department X Department Y
       Direct materials requisitioned $10,000      $16,000
       Direct labor cost               $11,000     $14,000
       Machine-hours                     5,000 mh    3,000 mh

Required:
a. Compute the budgeted factory overhead rate for Department X.
b. Compute the budgeted factory overhead rate for Department Y.
c. What is the total overhead cost of Job 10?
d. If Job 10 consists of 50 units of product, what is the unit cost of this job?




   5. Pumpkin Plastic Products Company manufactures pipes and applies manufacturing costs
       to production at a budgeted indirect-cost rate of $9 per direct labor-hour. The following
       data are obtained from the accounting records for June 2010:

   Direct materials                                       $300,000
   Direct labor (16,000 hours @ $11/hour)                  $ 44,000
   Indirect labor                                          $ 20,000
   Plant facility rent                                   $ 100,000
   Depreciation on plant machinery and equipment           $ 40,000
   Sales commissions                                       $ 30,000
   Administrative expenses                                 $ 40,000

Required:
a. What actual amount of manufacturing overhead costs was incurred during June 2010?
b. What amount of manufacturing overhead was allocated to all jobs during June 2010?
c. For June 2010, was manufacturing overhead underallocated or overallocated? Explain.




   6. Isabelle, Inc., uses a budgeted factory overhead rate to apply overhead to production. The
      following data are available for the year ended December 31, 20X5.

                               Budgeted             Actual
       Factory overhead        $675,000           $716,000
       Direct labor costs      $450,000           $432,000
       Direct labor-hours        12,500 dlh         13,325 dlh




Required:
a. Determine the budgeted factory overhead rate based on direct labor-hours.
b. What is the applied overhead based on direct labor-hours?
c. Is overhead overapplied or underapplied? Explain.




   7. A local accounting firm employs 20 full-time professionals. The budgeted annual
      compensation per employee is $40,500. The average chargeable time is 500 hours per
      client annually. All professional labor costs are included in a single direct-cost category
      and are allocated to jobs on a per-hour basis.

Other costs are included in a single indirect-cost pool, allocated according to professional labor-
hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients
during the coming year.

   a. What is the budgeted direct labor cost rate per hour?




   b. What is the budgeted indirect-cost rate per hour?
   c. If ten clients are lost and the workforce stays at 20 employees, then the direct labor cost
      rate per hour:




   8. A local engineering firm is bidding on a design project for a new client. The total
      budgeted direct-labor costs for the firm are $400,000. The total budgeted indirect costs
      are $600,000. It is estimated that there are 8,000 billable hours in total.

Required:
a. What is the budgeted direct-labor cost rate?
b. What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?
c. What should be the engineering firm bid on the project if the direct labor hours are estimated
   at 300 hours?




   9. Mertens Company provides the following ABC costing information:
Activities                   Total Costs    Activity-cost drivers
Account inquiry hours         $200,000         10,000 hours
Account billing lines         $140,000      4,000,000 lines
Account verification accounts $75,000          40,000 accounts
Correspondence letters         $ 25,000         4,000 letters
 Total costs                  $440,000

The above activities are used by Departments A and B as follows:

                             Department A Department B
Account inquiry hours          2,000 hours     4,000 hours
Account billing lines       400,000 lines    200,000 lines
Account verification accounts 10,000 accounts 8,000 accounts
Correspondence letters         1,000 letters   1,600 letters

1) How much of the account inquiry cost will be assigned to Department A?




2) How much of the account billing cost will be assigned to Department B?




3) How much of account verification costs will be assigned to Department A?




4) How much of correspondence costs will be assigned to Department B?
5) How much of the total costs will be assigned to Department A?




6) How much of the total costs will be assigned to Department B?




   10. Fey Corporation manufactures two models of office chairs, a standard and a deluxe
       model. The following activity and cost information has been compiled:
                  Number of           Number of               Number of
Product              Setups          Components      Direct Labor Hours
Standard                 22                   8                     375
Deluxe                   28                  12                     225

Overhead costs       $40,000              $80,000

1) Assume a traditional costing system applies the $120,000 of overhead costs based on direct
labor hours. What is the total amount of overhead costs assigned to the standard model?




2) Assume a traditional costing system applies the $120,000 of overhead costs based on direct
labor hours. What is the total amount of overhead costs assigned to the deluxe model?




3) Number of setups and number of components are identified as activity-cost drivers for
overhead. Assuming an activity-based costing system is used, what is the total amount of
overhead costs assigned to the standard model?




4) Number of setups and number of components are identified as activity-cost drivers for
overhead. Assuming an activity-based costing system is used, what is the total amount of
overhead costs assigned to the deluxe model?
   11. Racer X Corporation manufactures two models of motorized go-carts, a standard and a
       deluxe model. The following activity and cost information has been compiled:

                  Number of         Number of                 Number of
Product              Setups        Components        Direct Labor Hours
Standard                 15                10                       750
Deluxe                   35                15                       500

Overhead costs       $15,000            $25,000

1) Assume a traditional costing system applies the $40,000 of overhead costs based on direct
labor hours. What is the total amount of overhead cost assigned to the standard model?




2) Assume a traditional costing system applies the $40,000 of overhead costs based on direct
labor hours. What is the total amount of overhead cost assigned to the deluxe model?




3) Number of setups and number of components are identified as activity-cost drivers for
overhead. Assuming an activity-based costing system is used, what is the total amount of
overhead cost assigned to the standard model?
4) Number of setups and number of components are identified as activity-cost drivers for
overhead. Assuming an activity-based costing system is used, what is the total amount of
overhead cost assigned to the deluxe model?




   12. Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is
       analyzed as follows:

                                  T-SHIRTS        SWEATSHIRTS
Production and sales volume      60,000 units        35,000 units
Selling price                         $16.00              $29.00
Direct material                        $ 2.00              $ 5.00
Direct labor                           $ 4.50              $ 7.20
Manufacturing overhead                 $ 2.00              $ 3.00
Gross profit                           $ 7.50             $13.80
Selling and administrative             $ 4.00              $ 7.00
 Operating profit                      $ 3.50              $ 6.80

What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit
and direct labor costs of Sweatshirts increase to $8.20 per unit.




1) Under the revised ABC system, the activity-cost driver rate for the supervision activity is:
2) Under the revised ABC system, supervision costs allocated to Sweatshirts will be:




3) Under the revised ABC system, total overhead costs allocated to Sweatshirts will be:




4) Under the revised ABC system, overhead costs per unit for the Sweatshirts will be:




5) Using an ABC system, next year's estimates show manufacturing overhead costs will total
$228,300 for 52,000 T-shirts. If all other T-shirt costs and sales prices remain the same, the
profitability that can be expected is:
   13. Gregory Enterprises has identified three cost pools to allocate overhead costs. The
       following estimates are provided for the coming year:

Cost Pool              Overhead Costs       Cost driver       Activity level
Supervision of direct labor $320,000        Direct labor-hours     800,000
Machine maintenance          $120,000       Machine-hours          960,000
Facility rent                $200,000       Square feet of area    100,000
 Total overhead costs        $640,000

The accounting records show the Mossman Job consumed the following resources:

                 Cost driver          Actual level
           Direct labor-hours         200
              Machine-hours           1,600
           Square feet of area        50

1) If Gregory Enterprises uses the three activity cost pools to allocate overhead costs, what are
the activity-cost driver rates for supervision of direct labor, machine maintenance, and facility
rent, respectively?




2) Using the three cost pools to allocate overhead costs, what is the total amount of overhead
costs to be allocated to the Mossman Job?
   14. Wilcox Company has budgeted sales volume of 60,000 units and budgeted production of
       54,000 units, while 10,000 units are in beginning finished goods inventory. How many
       units are targeted for ending finished goods inventory?




   15. Kason, Inc., expects to sell 20,000 pool cues for $24.00 each. Direct materials costs are
       $4.00, direct manufacturing labor is $8.00, and manufacturing overhead is $1.60 per pool
       cue. The following inventory levels apply to 2011:

                           Beginning inventory Ending inventory
   Direct materials                24,000 units     24,000 units
   Work-in-process inventory            0 units          0 units
   Finished goods inventory         2,000 units      2,500 units

a) On the 2012 budgeted income statement, what amount will be reported for sales?




b) How many pool cues need to be produced in 2012?
c) On the 2012 budgeted income statement, what amount will be reported for cost of goods sold?




d) What are the 2012 budgeted costs for direct materials, direct manufacturing labor, and
manufacturing overhead, respectively?




   16. The following information pertains to the January operating budget for Casey
       Corporation, a retailer:

   Budgeted sales are $200,000 for January
   Collections of sales are 50% in the month of sale and 50% the next month
   Cost of goods sold averages 70% of sales
   Merchandise purchases total $150,000 in January
   Marketing costs are $3,000 each month
   Distribution costs are $5,000 each month
   Administrative costs are $10,000 each month



a) For January, budgeted gross margin is:
b) For January, the amount budgeted for the nonmanufacturing costs budget is:




   17. Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is
       analyzed as follows:

                                  T-SHIRTS        SWEATSHIRTS
Production and sales volume      60,000 units        35,000 units
Selling price                         $16.00              $29.00
Direct material                        $ 2.00              $ 5.00
Direct labor                           $ 4.50              $ 7.20
Manufacturing overhead                 $ 2.00              $ 3.00
Gross profit                           $ 7.50             $13.80
Selling and administrative             $ 4.00              $ 7.00
 Operating profit                      $ 3.50              $ 6.80

What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit
and direct labor costs of Sweatshirts increase to $8.20 per unit.




   18. Beat, Inc., expects to sell 60,000 athletic uniforms for $80 each in 2012. Direct materials
       costs are $20, direct manufacturing labor is $8, and manufacturing overhead is $6 for
       each uniform. The following inventory levels apply to 2011:
                           Beginning inventory Ending inventory
   Direct materials                24,000 units     18,000 units
   Work-in-process inventory            0 units          0 units
   Finished goods inventory        12,000 units     10,000 units

a) How many uniforms need to be produced in 2012?




b) What is the amount budgeted for direct material purchases in 2012?




c) What is the amount budgeted for cost of goods manufactured in 2012?




d) What is the amount budgeted for cost of goods sold in 2012?




   19. Wallace Company provides the following data for next year:

                      Month        Budgeted Sales
                       January              $120,000
                       February              108,000
                       March                 132,000
                       April                 144,000

The gross profit rate is 40% of sales. Inventory at the end of December is $21,600 and target
ending inventory levels are 30% of next month's sales, stated at cost.

a) Purchases budgeted for January total:




b) Purchases budgeted for February total:




   20. St. Claire Manufacturing expects to produce and sell 6,000 units of Big, its only product,
       for $20 each. Direct material cost is $2 per unit, direct labor cost is $8 per unit, and
       variable manufacturing overhead is $3 per unit. Fixed manufacturing overhead is $24,000
       in total. Variable selling and administrative expenses are $1 per unit, and fixed selling
       and administrative costs are $3,000 in total. According to generally accepted accounting
       principles, inventoriable cost per unit of Big would be:




   21. Perry Company has the following information:

               Month        Budgeted Sales
               March             $100,000
               April              106,000
               May                   102,000
               June                  109,000
               July                  105,000

In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's
cost of sales.

Required:
Prepare a purchases budget for April through June.




   22. Picture Pretty manufactures picture frames. Sales for August are expected to be 10,000
       units of various sizes. Historically, the average frame requires four feet of framing, one
       square foot of glass, and two square feet of backing. Beginning inventory includes 1,500
       feet of framing, 500 square feet of glass, and 500 square feet of backing. Current prices
       are $0.30 per foot of framing, $6.00 per square foot of glass, and $2.25 per square foot of
       backing. Ending inventory should be 150% of beginning inventory. Purchases are paid
       for in the month acquired.

Required:
a. Determine the quantity of framing, glass, and backing that is to be purchased during August.
b. Determine the total costs of direct materials for August purchases.

   a.




   b.




   23. Christy Enterprises reports the year-end information from 2011 as follows:

   Sales (100,000 units)                               $500,000
   Less: Cost of goods sold                              300,000
   Gross profit                                          200,000
   Operating expenses (includes $20,000 of Depreciation) 120,000
   Net income                                           $ 80,000
Christy is developing the 2012 budget. In 2012 the company would like to increase selling prices
by 10%, and as a result expects a decrease in sales volume of 5%. Cost of goods sold as a
percentage of sales is expected to increase to 62%. Other than depreciation, all operating costs
are variable.

Required:
Prepare a budgeted income statement for 2012.




                                        ******************
                                            Good Luck

								
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