Question

Ugly Australian Instructor Cosmetic Screening Limited uses direct labour-hours as the basis for allocating overhead on a plantwide basis. The company is considering the switching to a department basis of overhead allocation with the Cosmetic Department using cosmetic machine-hours and the Screening Department using screening machine hours. At the beginning of 2021, the company made the following estimates: Department Cosmetic Screening Direct General Labour Hours 85.000 35.00 Direct Cosmetic Machine-hours 106,000 98 Direct Screening Machine-hours 1,400 298,000 Total Fixed Indirect Material Overhead $689.000.00 $1,250,000.00 Total Fixed Indirect Labour and Manufacturing Overhead $425,000.00 $85,000.00 Variable Manufacturing Overhead per Direct General Labour $2.75 $2.75 Hour Variable Manufacturing Overhead per Cosmetic Machine- $5.25 $5.25 Hour Variable Manufacturing Overhead per Screening Machine- $8.50 $8.50 Hour Meanwhile, Nasty Mean Tasmanian Limited (a competitor of Ugly Australian Instructor Cosmetic Screening Limited) uses process-costing approach to manufacture its sole product - Terrible Bald Hair Wigs. To manufacture the wigs, each unit passes through two departments

Answer 1

Answer

Screening 98 Total 106098 Particulars Cosmetic Direct cosmetic Machine 106000 hour Direct Screening Machine 1400 hour Total machine hours 107400 298000 299400 298098 405498 (A) 85000 510000 Total Fixed Indirect labour 425000 and Manufacturing overhead 689000 1250000 1939000 Total Fixed Indirect Material Total Fixed cost (B) 1114000 1335000 2449000 6.04 (B/A) Plant wide rate per machine hour Predetermined Department rate 10.37 4.48 (B/A) (B/A)

1) Plant-wide rate = Total fixed cost/ total machine-hours = 6.04

2) Predermined department overhead rate = Total fixed cost for department/ machine hours

for cosmateic = 10.37

for screening = 4.48

3)

Flow of production Physical Units Equivalent Units Labour Conversion Materials 384000 2780000 3164000 Beginning Inventory Started during the period To account for Completed and Transferred Out Ending Inventory Units accounted for (Equivalent units) 2974000 190000 3164000 %Beginning Inventory complete %Ending Inventory complete 48% 64% 65% 81% 31% 37% Work done this period Completing beginning inventory Started and Completed Ending inventory Total 199680 2590000 121600 134400 2590000 153900 264960 2590000 70300 2925260 2911280 2878300

Cost per equivalent unit Beginning Inventory Costs Costs added 5,98,000.00 29,77,200.00 8,10,000.00 16,60,000.00 Total 4,88,000.00 18,96,000.00 32,16,000.00 78,53,200.00 97,49,200.00 29,25,260.00 1.10 Equivalent units Cost per equivalent unit 29,11,280.00 28,78,300.00 1.02 0.58 Total Assignment of costs Completed and transferred out Beginning Inventory Cost to complete Started and completed 5,98,000.00 2,04,201.35 26,48,645.27 34,50,846.62 8,10,000.00 77,512.42 14,93,728.94 23,81,241.36 4,88,000.00 18,96,000.00 2,91,294.23 5,73,008.00 28,47,418.69 69,89,792.90 36,26,712.92 94,58,800.89 Ending Inventory 1,24,353.38 88,758.64 77,287.08 2,90,399.11 97,49,200.00

Value of work in progress transferred =9458800.89

4) value of Ending Inventory = 290399.12