Homework Answers
Solution 7:
When calculating an allocation rate for estimated fixed production overhead cost, accountants working with other managers choose the "Allocation base to use as the denominator"
Hence option A is correct.
Solution 8:
some companies use throughput costing for internal purposes because
1. They believe only direct materials costs are truly variable in the short run
2. They believe direct labor costs are fixed in the short run
3. They believe all overhead costs are fixed in the short run
Hence option D "All of the above" is correct.
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When calculating an allocation rate for estimated fixed production overhead cost, accountants, working with other managers,...
Manufacturing Overhead Allocation Rate
Andrews Company manufactures blenders, offering its customers two model options – a basic model and a deluxe model. Each model of blender goes through the same two-step production process – it is assembled in the Assembly Department and packaged for sale in the Packaging Department. For the month that is about begin, Andrews Company is estimating manufacturing overhead costs of $680,000 in the Assembly Department and $270,000 in the Packaging Department. The company also estimates the following usage of direct...
2. The formula for pre-determined overhead rate is: a. Estimated allocation base divided by estimated overhead...
2. The formula for pre-determined overhead rate is: a. Estimated allocation base divided by estimated overhead b. Estimated allocation base minus estimated overhead c. Estimated overhead minus estimated allocate base d. None of the above 3. If Product T requires highly skilled employees to make it and Product Pis labor intensive and if machine hours is 20% of the non-overhead cost, then a. The allocation base for Product P should be direct labor cost and the allocation base for Product...
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OVERHEAD COST ALLOCATION Marion & Gaborik are production managers at the Marion Gaborik Pty Ltd trailer factory in High River, Alberta, Canada. Both managers use predetermined overhead application rates to apply manufacturing overhead to their production. To calculate their application rates Marion uses machine hours while Gaborik uses direct labour hours. BUDGETED production and cost data for the two managers follows. Marion Gaborik Manufacturing overhead $241,500 $231,500 Units 9,500 7,500 Machine hours 10,000 5,000 Material cost $12,500 $15,500 Direct labour...
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Manufacturing Overhead Allocation Base and Calculating the Cost of Jobs. Brenner Company expects to incur $3,000,000 in manufacturing overhead costs this year. During the year, it expects to use 50,000 direct labor hours at a cost of $600,000 and 80,000 machine hours. Required: Prepare a predetermined overhead rate based on direct labor hours, direct labor cost, and machine hours. Why might Brenner Company prefer to use machine hours to allocate manufacturing overhead? Using each of the predetermined overhead rates calculated...
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1.) When there is a standard batch size for production activity: Multiple Choice: (A) A modification...
1.) When there is a standard batch size for production activity: Multiple Choice: (A) A modification of the traditional approach to constructing the flexible budget for control purposes allows for a more detailed analysis of batch-related overhead costs. (B) It is not possible to construct a flexible budget for cost-control purposes. (C.) Standard cost variances for only the variable portion of batch-related manufacturing overhead costs can be calculated. (D) The variable portion of the total flexible-budget variance for batch-related costs...
Advocates of throughput costing maintain that ________. A) both variable and fixed are necessary to produce...
Advocates of throughput costing maintain that ________. A) both variable and fixed are necessary to produce goods; therefore, both types of costs should be inventoried B) all manufacturing costs plus some design costs should be inventoried C) fixed manufacturing costs are related to the capacity to produce rather than to the actual production of specific units D) except direct labor no other costs are truly variable in output Tall Statues Inc., produces wood statues. Management has provided the following information:...
i Requirements 1. Compute the cost allocation rate for each activity. 2. Compute the manufacturing overhead...
i Requirements 1. Compute the cost allocation rate for each activity. 2. Compute the manufacturing overhead cost that should be assigned to Job 420. 3. Compute the manufacturing overhead cost that should be assigned to Job 510. Print Done Data Table Total Budgeted Manufacturing Overhead Cost Allocation Base $ Activity Materials handling .... Machine setup Insertion of parts. 8,700 4,650 49,300 75,600 Number of parts Number of setups Number of parts Finishing Finishing direct labor hours $ 138,250 Total .....
cost allocation
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The standard variable overhead cost rate for the Gordon Company is $13.25 per unit. Budgeted fixed...
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2. The formula for pre-determined overhead rate is: a. Estimated allocation base divided by estimated overhead b. Estimated allocation base minus estimated overhead c. Estimated overhead minus estimated allocate base d. None of the above 3. If Product T requires highly skilled employees to make it and Product Pis labor intensive and if machine hours is 20% of the non-overhead cost, then a. The allocation base for Product P should be direct labor cost and the allocation base for Product...
Estimated total machine-hours (MHS) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH Forming Customizing 6,000 4, een $16,800 $9,200 $ 2.00 $ 4.00 Total 10,000 $26, eee During the period, the company started and completed two jobs--Job C and Job L. Data concerning those two jobs follow: Direct materials Direct labor cost Forming machine-hours Customizing machine-hours Job C Job L $14,700 $ 8,400 $21,600 $ 8,400 2,7ee 3,380 400 3,689 Required: a. Assume that the...
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