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Finance Related Multiple Problems




Question;1. Compute the manufacturing overhead rate and under- or over applied overhead.;A-1 Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $325,000 for the year, and machine usage is estimated at 125,000 hours.;For the year, $342,000 of overhead costs are incurred and 130,000 hours are used.;Instructions;(a) Compute the manufacturing overhead rate for the year.;(b) What is the amount of under or over-applied overhead at December 31?;(c) Prepare the adjusting entry to assign the under or over-applied overhead for the year to cost of goods sold.;2. Answer questions on costs and production.;The ledger of B-2 Company has the following work in process account.;Work in Process?Painting;5/1 Balance 3,590;5/31 Materials 5,160;5/31 Labor 2,740;5/31 Overhead 1,380;5/31 Transferred out?;5/31 Balance?;Production records show that there were 400 units in the beginning inventory, 30% complete, 1,400 units started, and 1,500 units transferred out. The beginning work in process had materials cost of $2,040 and conversion costs of $1,550. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.;Instructions;(a) How many units are in process at May 31?;(b) What is the unit materials cost for May?;(c) What is the unit conversion cost for May?;(d) What is the total cost of units transferred out in May?;(e) What is the cost of the May 31 inventory?;3. Assign overhead using traditional costing and activity based costing (ABC).;C-3 Company has two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company?s operations.;Standard Custom;Direct labor costs $50,000 $100,000;Machine hours 1,000 1,000;Setup hours 100 400;Total estimated overhead costs are $270,000. Overhead cost allocated to the machining activity cost pool is $170,000, and $100,000 is allocated to the machine setup activity cost pool.;Instructions;(a) Compute the overhead rate using the traditional (plant-wide) approach.;(b) Compute the overhead rates using the activity-based costing approach.;(c) Determine the difference in allocation between the two approaches.


Paper#50850 | Written in 18-Jul-2015

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