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##### Question #1 (15 points) The ABC Company has two o...

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Question #1 (15 points) The ABC Company has two operating divisions and two support divisions. The following table presents the amount of hours of service provided by the two support divisions: OP 1 OP 2 SUP 1 SUP 2 SUP 1 1,000 2,000 0 1,000 SUP2 3,000 1,500 500 0 The costs for the four departments appear below: Department Costs OP 1 \$250,000 OP 2 \$300,000 SUP 1 \$150,000 SUP 2 \$60,000 a) Allocate the support department costs to the operating departments using the direct method. b) Allocate the support department costs to the operating departments using the step-down method, starting with Support Department 1. Question #2 (15 points) A company purchases and processes 15,000 gallons of raw material at a cost of \$30,000. From this process, it produces 600 pounds of JP1 and 900 pounds of JP2. JP1 can be sold for \$21 per pound or processed further into 6,000 units of FP1 at a total cost of \$12,750. FP1 has a selling price of \$4 per unit. JP2 can be sold for \$26 per pound or processed further into 10,200 units of FP2 at a total cost of \$26,250. FP2 has a selling price of \$5 per unit. Assume that the company sells only FP1 and FP2. In other words, it further processes both joint products. Also, assume there is no beginning or ending inventory. Required: Allocate the joint costs to JP1 and JP2 using the physical measure method (based on pounds), sales value at split off method, and the NRV method. Bonus: Is it a good idea for the company to process JP1 into FP1? Is it a good idea for the company to process JP2 into FP2? Why or why not (be specific!). Question #3 (30 points) Expected production (units) 8,000 Standard pounds of DM usage per unit 3.00 Standard DM price per pound \$5 Standard DML hours per unit 5.00 Standard DML rate per hour \$15.00 Standard VMOH rate \$6.00 per DLH Standard FMOH rate \$8.00 per DLH Actual Units produced 7,800 Pounds of DM purchased 25,000 Total cost of DM purchased \$130,000 Pounds of DM used 23,100 DML hours worked 40,100 Total cost of DML \$585,460 VMOH \$250,000 FMOH \$350,000 a) Calculate the following variances: Direct materials price variance Direct materials efficiency variance Direct manufacturing labor rate variance Direct manufacturing labor efficiency variance VMOH spending variance VMOH efficiency variance FMOH spending variance FMOH production-volume variance b) Prepare the following journal entries: Purchase of direct materials Usage of direct materials Paying of wages for direct manufacturing labor Incurrence of VMOH & FMOH Application of VMOH & FMOH to production Closing out VMOH and FMOH accounts

Paper#4721 | Written in 18-Jul-2015

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