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acc206 Overhead application: Working backward




Question;The Towson Manufacturing Corporation applies overhead on the;basis of machine hours. The following divisional information is presented for;your review;Division A Division;B;Actual machine hours 22,500?;Estimated machine hours 20,000?;Overhead application rate $4.50 $5.00;Actual overhead $110,000?;Estimated overhead? $90,000;Applied overhead? $86,000;Over- (under-) applied overhead? $6,500;FIND THE UNKNOWNS FOR EACH OF THE DIVISIONS.;2. Computations;using a job order system;General Corporation employs a job order cost system. On May;1 the following balances were extracted from the general ledger;Work in process $ 35,200;Finished goods 86,900;Cost of goods sold 128,700;Work in Process consisted of two jobs, no. 101 ($20,400) and;no. 103 ($14,800). During May, direct materials requisitioned from the;storeroom amounted to $96,500, and direct labor incurred totaled $114,500.;These figures are subdivided as follows;Direct Materials;Direct Labor;Job No. Amount Job No. Amount;101 $5,000 101 $7,800;115 19,500 103;20,800;116 36,200 115;42,000;Other 35,800 116;18,000;$96,500 Other 25,900;$114,500;Job no. 115 was the only job in process at the end of the;month. Job no. 101 and three "other" jobs were sold during May at a;profit of 20% of cost. The "other" jobs contained material and labor;charges of $21,000 and $17,400, respectively.;General applies overhead daily at the rate of 150% of direct;labor cost as labor summaries are posted to job orders. The firm's fiscal year;ends on May 31.;Instructions;a. Compute;the total overhead applied to production during May.;b. Compute;the cost of the ending work in process inventory.;c. Compute;the cost of jobs completed during May.;d. Compute;the cost of goods sold for the year ended May 31.;3. High-low;method;The following cost data pertain to 20X6 operations of;Heritage Products;Quarter 1 Quarter 2 Quarter 3 Quarter 4;Shipping costs $58,200 $58,620 $60,125 $59,400;Orders shipped 120 140 175 150;The company uses the high-low method to analyze costs.;a. Determine;the variable cost per order shipped.;b. Determine;the fixed shipping costs per quarter.;c. If;present cost behavior patterns continue, determine total shipping costs for;20X7 if activity amounts to 570 orders.;4. Break-even;and other CVP relationships;Cedars Hospital has average revenue of $180 per patient day.;Variable costs are $45 per patient day, fixed costs total $4,320,000 per year.;a. How many;patient days does the hospital need to break even?;b. What;level of revenue is needed to earn a target income of $540,000?;c. If;variable costs drop to $36 per patient day, what increase in fixed costs can be;tolerated without changing the break-even point as determined in part (a)?;5. Direct;and absorption costing;The information that follows pertains to Consumer Products;for the year ended December 31, 20X6.;Inventory, 1/1/X6 24,000 units;Units manufactured 80,000;Units sold 82,000;Inventory, 12/31/X6? units;Manufacturing costs;Direct materials $3 per unit;Direct labor $5 per unit;Variable factory overhead $9 per unit;Fixed factory overhead $280,000;Selling & administrative expenses;Variable $2 per unit;Fixed $136,000;The unit selling price is $26. Assume that costs have been;stable in recent years.;Instructions;a. Compute;the number of units in the ending inventory.;b. Calculate;the cost of a unit assuming use of;1. Direct;costing.;2. Absorption;costing.;c. Prepare;an income statement for the year ended December 31, 20X6, by using direct;costing.;d. Prepare;an income statement for the year ended December 31, 20X6, by using absorption;costing.


Paper#42446 | Written in 18-Jul-2015

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