greater than variable costs. He argues that idle capacity is worse since it has no contribution to overheads whereas a lower price above variable costs would have some positive contribution to the fixed costs and therefore improve profitability for the division. He believes a price of $40 is insufficient to cover the total costs and that the systems division does not want to subsidize the overheads of outside buyers. What decisions will each of these approaches lead to? Evaluate the decisions
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and revised budgets in 2001? What would you predict for each cost in the long-run? The elements account for the difference between 2000 Actual and 2001 Budget are the estimated material and scrap cost‚ overhead cost based on cartridge production volume. Revised material and scrap cost‚ overhead cost account for the difference between original and revised 2001 Budget in Table B. The estimated and actual production volume affects each element of cost. Larger volume means lower per unit cost. In long-run
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Question 1 Not yet answered Marked out of 1.00 Flag question Question text Overhead is applied to jobs at a rate of 150% of direct labor costs. Job # 100 required $500 in direct labor costs. The job was initially budgeted to require $550 in direct labor costs. Overhead applied to # 100 during the period amounted to: Select one: a. $550 b. $750 c. $825 d. some other amount. Question 2 Not yet answered Marked out of 1.00 Flag question Question text Which of the following is an example of a direct material
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When direct labor is used as an allocation base for overhead‚ it is implicitly assumed that overhead cost is directly proportional to direct labor. When cost systems were originally developed in the 1800s‚ this assumption may have been reasonably accurate. However‚ direct labor has declined in importance over the years while overhead has been increasing. This suggests that there is no longer a direct link between the level of direct labor and overhead. Indeed‚ when a company automates‚ direct labor is
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2‚ No.1‚ January 2013 _________________________________________________________________________________ www.borjournals.com Blue Ocean Research Journals 83 Overhead Capital”‚ “Economic Overheads”‚ “Overhead Capital”‚ “Basic Economic Facilities”‚ and so on. Nurkse elaborated the concept of overhead capital. According to him “overhead investment aims at providing the services – transport‚ power‚ and water supply‚ which are basic for any productive activity‚ cannot be imported from abroad‚ required
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) E 4-22A Req. 1 Plantwide overhead rate = Estimated total manufacturing costs Estimated cost allocation base = = $1‚150‚000 25‚000* direct labor hours = = $46 per direct labor hour *When calculating plantwide overhead rates‚ all direct labor hours incurred in the plant are used. (continued) E 4-22A Req. 2 Departmental overhead rate Machining Dept. overhead rate = = Finishing Dept. overhead rate Total department overhead Cost allocation base (estimated)
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process on May 1 $141‚800 Direct materials costs for May 174‚500 Direct labor costs for May 162‚500 Overhead applied at rate of 140% of direct labor dollars Jobs completed during May: Job 84 $198‚780 Job 85 102‚520 Job 86 119‚450 Job 87 93‚150 Job 88 was not complete at the end of May. If $72‚400 of materials were charged to Job 88 ’s job cost card‚ how much overhead was applied to Job 88? Answer a. $70‚000 b. $120‚000 c. $72‚400 d. $35‚100 Unit costs for
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and $12‚000 indirect materials). c. Direct labor cost incurred‚ $90‚000; indirect labor cost incurred‚ $110‚000. d. Depreciation recorded on factory equipment‚ $40‚000. e. Other manufacturing overhead costs incurred during October‚ $70‚000 (credit Accounts Payable). f. The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30‚000 machine-hours were recorded for October. g. Production orders costing $520‚000 according to their job cost sheets were
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Company uses a single plant wide rate to allocate manufacturing overhead to jobs. The rate is computed by dividing expected manufacturing overhead by the expected denominator activity level. Expected manufacturing cost was $6‚000‚000 and the expected denominator activity level was 15‚000. The actual manufacturing overhead was $5‚600‚000 and the actual denominator activity level was 14‚000. Which of the following is the manufacturing overhead result for this period? (2 marks) a. $200‚000 over-applied b
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managerial accounting information. Because of the need to comply with the managers’ requests‚ four different variances for manufacturing overhead are computed each month. The information for the September overhead expenditures is as follows: Budgeted output units 3‚200 units Budgeted fixed manufacturing overhead $20‚000 Budgeted variable manufacturing overhead $5 per direct labor hour Budgeted direct manufacturing labor hours 2 hours per unit Fixed manufacturing costs incurred
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