in the electronics and mechanical equipment (machinery) industries—are quietly waging a different battle: the battle to conquer overhead costs. Indeed‚ our research shows that overhead costs rank behind only quality and getting new products out on schedule as a primary concern of manufacturing executives. The reason for this concern is obvious: high manufacturing overhead has a dramatic effect on profit and competitiveness‚ and manufacturing managers believe themselves to be poorly equipped to manage
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Introduction As stated in the introductory section‚ Sheraton Hotels and Resorts Worldwide‚ the owners of Sheraton Hotels intends to build a new hotel in Zimbabwe’s resort town of Victoria Falls. Victoria Falls being a popular destination is a prime tourism destination Sheraton Hotels and Resorts Worldwide identified Zimbabwe’s tourist towns as a potentially profitable location to build their latest state of the art hotel and have initiated this chapter of the project is to analyze the opportunities
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Statement of the draft budget £(000) £ (000) Sales 1000 Less Cost of sales: Direct Materials 320 Direct wages 200 Variable factory overheads 100 (620) Contribution 380 Less Fixed Costs: Fixed factory overheads 100 Selling and distribution overheads 120 Administration overheads 180 (400) Loss (20) Unit selling price = 1‚000‚000/50‚000 = £20 Unit variable cost = 620‚000/50‚000 = £12.4 Contribution per unit
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1. Buker Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below: The predetermined overhead rate for the recently completed year was closest to: A. $22.04 B. $29.59 C. $7.67 D. $29.71 Solution: D 1‚630‚960 / 74‚000 = 22.04 22.04 + 7.67 = 29.71 OR Total est MOH: Total Variable + Total Fixed Total est Quantity of Allocation Based (7.67 * 74‚000) + 1‚630‚960 = 29
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inventory account balances were as follows: Raw Materials | £10‚000 | Work in Process | £4‚000 | Finished Goods | £8‚000 | The company applies overhead cost to jobs on the basis of machine-hours. Its predetermined overhead rate for the fiscal year starting July 1 was based on a cost formula that estimated £99‚000 of manufacturing overhead for an estimated activity level of 45‚000 machine-hours. During the year‚ the following transactions were completed: * a. Raw materials purchased on
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find that manufacturing overhead is currently assigned to products based on the direct labor costs in the products. Last year’s manufacturing overhead was $880‚000‚ based on production of 320‚000 standard cassettes and 100‚000 high-grade cassettes. Selling prices last year averaged $3.60 per standard tape and $5.80 per high-grade tape. Direct labor and direct materials costs for last year were as follows: Management believes the following three activities cause overhead costs. The cost drivers
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costing differs from normal costing in that overhead allocation rate = actual overhead / actual volume of base. This is ex post allocation rate – if actual overhead will not be known till year-end‚ then cost can only be determined then. 15.963 [Spring 2007] Managerial Accounting & Control 4 Colorscope‚ Inc. For Colorscope‚ we have actual‚ as opposed to budgeted data‚ so this is an illustration of actual costing. How many overhead cost pools are appropriate for Colorscope
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goods manufactured 343‚000 Finished goods available for sale $ 428‚000 Less finished goods‚ July 31 93‚000 Cost of goods sold $ 335‚000 E1-5 Selling & Direct Direct Factory Admin. Items Materials Labor Overhead Expense a. Steel used in an overhead door plant Ö b. Cloth used in a shirt factory Ö c. Fiberglass used by a sailboat builder Ö d. Cleaning solvent for the factory floor Ö e. Wages of a binder employed in a printing plant Ö f. Insurance
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Exhibit 2: Overhead by Account Number 1000 $7‚806 $5‚572 $5‚679 1500 6‚824 5‚883 5‚928 2000 3‚794 2‚031 2‚115 3000 2‚529 1‚354 1‚410 4000 8‚888 7‚360 7‚433 5000 24‚460 20‚063 20‚274 8000 5‚946 3‚744 3‚744 9000 6‚771 5‚948 5‚987 11000 5‚011 3‚150 3‚030 12000 28‚077 15‚027 15‚683 14000 9‚784 8‚025 8‚110 Total Overhead $109‚890 $78‚157 $79‚393 % change in Overhead from 1988 to 1990 -27.75% Overhead allocation rate as a % of direct labor dollars (Total Overhead/ Total DL) 434
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1. The following information relates to a job cost system in a factory: For the year Estimated Actual Factory Overhead $600‚000 $635‚000 Direct Labor $500‚000 $525‚000 Direct Materials $500‚000 $520‚000 Direct Labor Hours 300‚000 hrs. 290‚000 hrs. The factory uses a predetermined overhead rate per direct labor hour to apply factory overhead. During the year jobs which cost $1‚200‚000 were completed‚ and finished goods costing $1‚000‚000 were sold. No inventories
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