Assuming the use of a plantwide overhead rate: a. Compute the rate for the current year. (Show your work for credit; 2 points) Cutting Machining Assembly Total Plant Direct Labor $300‚000.00 $200‚000.00 $400‚000.00 $900‚000.00 Mfg Overhead $540‚000.00 $800‚000.00 $100‚000.00 $1‚440‚000.00 1a) Plantwide O/H Rate 1‚440‚000/900000 1.60 b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job.(show
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manufacturing overhead related to production operations as whole‚ these costs cannot be assigned to specific jobs on the basis of actual costs incurred. Instead‚ Wall Décor assigns manufacturing overhead to work in process and to specific jobs on an estimated basis through the use of a predetermined overhead rate. The accountant team of Wall Décor calculates this rate as total estimated manufacturing overhead cost divided by total estimated cost of prints. Once the rate is available the overhead cost can
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December 31‚ 20x3‚ consisted of one job (no. 3088)‚ which was carried on the year-end balance sheet at $78‚400. There was no finished-goods inventory on this date. BBBC applies manufacturing overhead to production on the basis of direct-labor cost. Budgeted totals for 20x4 for direct labor and manufacturing overhead are $2‚100‚000 and $2‚730‚000‚ respectively. Actual results for the year follow. Direct material used ................................................................................
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1. Calculate the overhead allocation rate for each of the model years 2003 through 2005. Are the changes since 2002 overhead allocation rates significant? Why have these changes occurred? Overhead Allocation refers to the process of identifying specific overheads of a particular cost centre and charging them. For example‚ in this case wages paid to truck drivers is an overhead cost which is directly identifiable with the Cost Centre i.e. ACF. In case of expenses which cannot be directly identified
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drivers to assign overhead to products. c. It is cheaper than an activity-based costing system. d. It offers greater product costing accuracy than an activity-based costing system. ____ 2. Unit-based product costing uses which of the following procedures? a. Overhead costs are traced to departments‚ then costs are traced to products. b. Overhead costs are traced to activities‚ then costs are traced to products. c. Overhead costs are traced directly to products. d. All overhead
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ACTIVITY-BASED COSTING MODEL I. Definition Activity based costing (ABC) is an accounting method that identifies the activities a firm performs creating the real cause of the overhead‚ and then assigns the indirect costs of those activity only to the products that are actually demanding the activities. An activity based costing (ABC) system recognizes the relationship between costs‚ activities and products‚ and through this relationship assigns indirect costs to products less arbitrarily than
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1. The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculated the overhead allocation rate using the 1987 model year budget. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? Solution: Based on the given info we calculate Overhead Allocation
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Assigning Overhead Costs – Overhead costs are not directly related to production volume‚ and therefore cannot be traced to units of product in the same way as direct materials and direct labor. Consequently‚ we must assign overhead costs using an allocation system. There are three methods of overhead allocation 1. The single plant wide overhead rate method (as discussed in Chapter 2) Single overhead rate = Total budgeted overhead for the plant / Total budgeted base With base being
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between job-order costing and process costing. © 2010 McGraw-Hill Ryerson Ltd. 2 Learning Objectives (con’d) 4. Compute a predetermined overhead rate‚ and explain its use in job-order costing for job-shop and batch-production environments. 5. Prepare journal entries to record the costs of direct material‚ direct labor‚ and manufacturing overhead in a job-order costing system. 6. Prepare a schedule of cost of goods manufactured‚ a schedule of cost of goods sold‚ and an income statement
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direct manufacturing costs and the run labor costs‚ and secondly the indirect costs‚ consisting of the machine usage costs or depreciation and the overhead costs. These costs allow us to calculate the monthly cost per unit‚ see Appendix 1 for the Excel file of the calculations. Some minor deviations from the correct cost per unit are possible since the overhead percentages of the packing and shipping given in Exhibit 5 are rounded off and sum up to 99% instead of 100%. Q2: Compare the estimated costs
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