Question

E4-27 (book/static) Question Help Capital Manufacturing processutoards. The companys norma. co m and is mandring overhead on the basis of direct manufacturing stor hours. Most of the company's production and a ccur in frutand second quarter of the year. The company is in danger of losing one of larger customers. Pie Wholesale due to large fluctuations in price. The owner of Capitol has requested an analysis of the manufacturing cost per und in the second and third quarters. You have been provided the following budgeted formation for the coming year Click the icon to view the budgeted information the con to view itonal information) Read the requirements a s manufacturing overhead costs based on the budgeted mandaling overhead role determined for each Requirement 1 and 2. Calculate tal manufacturing cost per unit for the second and third quarters ing company w quarter and an annual budgeted manufacturing overhead rate First Idently the follow the manufacturing cost per unit, then the appropriate amounts to calculate the each quarter and an annual budgeted manufacturing overhead role for the year Abbreviation O verheadmat a cost per for second and third quarter based on the budgeted mandouring overhead role determined for s, and Vars variable)

Answer 1

Refer the below images for the above mentioned questions, in a detailed way of solution.

Solution : Requirement Quarter * particulars Annual 2 400 3 100 200 4 250 1290 Фор - 2100 I 1. Surfboards sold - 500 2. Direct mfg labor hours 1000 (2x Qow 1) 3. Budated fixed mig overhead $20000 costs 4. Budgeted fixed mig overhead $20 rate per direct ta bor hours ($20000 ² Row 2) 80000 20000 20000 $20000 $25 $100 $ 40 $32 Bodgeted costs Based on particolars Quarterly ritg. overhead rate 2nd Quarter 3rd Quarter Direct Material costs ($65 x 400 boards; 100 boards) $26000 $6500 Direct Mfg labor costs ($20 1800 hours, 200 hours) 6 16000 & 4000 Variable only overhead costs ($ 16x800hours" 200 hour) & 12.000 s 3200 Fixed with overhead costs ($25 x 800 hours, $100+ 200 $ 20000 20000 hour) Total manufacturing costs 574800 Divided by boards manufactured each aquarter = 400 Manofacturing cost per board & $ 14000 $33700 $33700

Revoirement : particulars Budated costs Based on Annual Manufacturing - Overhead Date 3rd quarter $ 650D $ 4000 and quarter Direct Material costs ($65 x 400 boards, $ 6.50 wo boards) 926000 Direct mfg labor costs (20x 800 hours $ 16000 $20x200 hours) variable mfg overteed costs /8 16+ 800 hours: $ 12.900 4 167 200 hours) Fixed mig overhead costs ( 4 32 x 8ohors;, $ 25600 a $32x200 hours) $ 3200 $ 6400 $ 20100 Total manufacturing costs Divided by boards manufactured each 80400 & Hoo too quarter $201.oo Manufacturing cost per board » $ 20.00 Requirement : Particolars and quarter 3rd quarter price based on quarterly budgeted mfg overhead vares calculated in requirement 0 ( $187.00+ 1201 $337.00 4 1201) $ 224.40 $404.40 price $ 241.20 $24120 based on annual budgeted mig overhead rates Calculated in requirement 6 (1 201.00 * 12010 $201.00 x 120-1)

* pacific wholesale might be seeing large flue tuations in the prices of the boards because capitola is determining budgeted manufacturing overhead vates on a quarterly rather than an annual basis capitola should ose the budgted annual manufacturing overhead vate because capacity decisions are based on longer annual periods rather than aquarterly periods prices should not vary based on yoar derly fluctations in production • capitola could vary prices based on market conditions and demand for at boards. In this case, capitola would charge higher prices in quarter a when demand for at boards is ligh. pricing based on partely budgets would cause capitola to do the opposite – to decrea rather than increase prices!