Question

Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total costs and costs per unit over the relevant range of 54,000 to 94,000 units is given below:

Required:

1. Complete the schedule of the company’s total costs and costs per unit as given in the relevant tab below.

2. Assume that the company produces and sells 84,000 units during the year at a selling price of $10.41 per unit. Prepare a contribution format income statement for the year.

Required 1 Required 2 Complete the schedule of the company's total costs and costs per unit as given in the relevant tab below. (Round the per unit variable cost and fixed cost to 2 decimal places.) Units Produced and Sold 54,000 74,000 94,000 Total costs: Variable cost 216,000 Fixed cost 400,000 Total costs 616,000 Cost per unit: Variable cost Fixed cost Total cost per unit < Required 1 Required 2 >

2.

Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 40,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $569,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $4.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $802,913 and its actual total direct labor was 40,500 hours.

Required:

Compute the company’s plantwide predetermined overhead rate for the year. (Round your answer to 2 decimal places.)

3.

Luthan Company uses a plantwide predetermined overhead rate of $23.10 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $277,200 of total manufacturing overhead cost for an estimated activity level of 12,000 direct labor-hours.

The company incurred actual total manufacturing overhead cost of $270,000 and 12,700 total direct labor-hours during the period.

Required:

Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

4.

Larned Corporation recorded the following transactions for the just completed month.

1. $81,000 in raw materials were purchased on account.
2. $79,000 in raw materials were used in production. Of this amount, $71,000 was for direct materials and the remainder was for indirect materials.
3. Total labor wages of $110,000 were paid in cash. Of this amount, $103,900 was for direct labor and the remainder was for indirect labor.
4. Depreciation of $195,000 was incurred on factory equipment.

Required:

Record the above transactions in journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

R:1) Schedule of total cost and cost per unit:- Units produced and sold 54,000 74,000 94,000 Total cost :- Variable cost 216,000 296,000 376,000 Fixed cost 400,000 400,000 400,000 Total costs 616,000 696,000 776,000 Cost per unit :- Variable cost 4.0000 4.0000 4.0000 Fixed cost 7.4074 5.4054 4.2553 Total costs per unit 11.4074 9.4054 8.2553 R:2) Contribution format income statement :- Particulars Amounts Sales (84000*10.41) 874,440 Less: Variable cost (84000*4) 336,000 Contribution margin 538,440 Less: Fixed cost 400,000 Net Income 138,440 2) Company's plantwide predetermined overhead rate for the year :- Predetermined overhead rate is = (Fixed overhead+Variable overhead)/Direct labor hours Predetermined overhead rate is = (569000+(4*40000))/40000 Predetermined overhead rate is = $ 18.2250/. 3) Manufacturing overhead cost that would have been applied to all jobs :- Manufacturing overhead applied is = predetermined overhead rate x actual direct labor hours Manufacturing overhead applied is = (23.10*12700) Manufacturing overhead applied is = $ 293,370/.