July 1, 2023
Question : 4.3 Apply the decision framework in a seven-step method to : 1186261
4.3 Apply the decision framework in a seven-step method to assign total actual costs to a distinct product.
1) The following data were taken from the records of a manufacturing company. The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base. Calculate the rate using machine hours as the allocation base.
Actual total indirect costs
$1,152,000
Budgeted total indirect costs
$1,216,000
Actual direct labour costs
$3,200,000
Actual direct labour rate
$50 per hour
Actual machine hours
300,000 hours
# of employees
32
A) $60.67
B) $10.67
C) $7.89
D) $4.05
E) $3.84
2) Last week Job # WPP 298 was charged: DM of $4,606; DL of $1,579; and, MOH of $3,960 based on machine hours. The materials requisition record for this week showed an additional purchase of 10 brackets at a unit cost of $16; the direct labour costs were the same as the first week; and, the total machine hours for both weeks are now 140 hours at $45 per machine hour. Calculate the revised total job cost. (direct materials + direct labour + manufacturing overhead).
A) $10,145
B) $11,884
C) $12,645
D) $18,184
E) $14,224
3) Camden Company gathered the following information for the year ended December 31:
Direct labour cost incurred for the year
$240,000
Manufacturing overhead costs
$180,000
Beginning finished goods inventory
$200,000
Work-in-process inventory, Dec. 31
$55,000
Finished goods inventory, Dec. 31
$67,500
Cost of goods sold
$141,000
Estimated direct labour hours
300,000
Clyde Company uses a job costing system.
What is the indirect cost allocation rate for the year be using direct labour hours as the allocation base?
A) $1.11 per direct labour hour
B) $0.90 per direct labour hour
C) $1.20 per direct labour hour
D) $0.60 per direct labour hour
E) $0.47 per direct labour hour
4) ZamTech Moldings allocates manufacturing overhead to jobs based on machine hours. The company has the following estimated costs for the upcoming year:
Direct materials used
$25,000
Direct labour costs
$62,000
Salary of factory supervisor
$41,000
Advertising expense
$33,000
Heating and lighting costs for factory
$21,000
Depreciation on factory equipment
$9,000
Sales commissions
$8,000
The company estimates that 1,800 direct labour hours will be worked in the upcoming year, while 2,000 machine hours will be used during the year. The predetermined indirect allocation rate per machine hour is closest to
A) $56.
B) $36.
C) $100.
D) $15.
E) $40
5) Copley Enterprises manufactures digital video equipment. For each unit $1,475 of direct material is used and there is $1,500 of direct manufacturing labour at $30 per hour. Manufacturing overhead is applied at $35 per direct manufacturing labour hour. Calculate the cost of each unit.
A) $2,975
B) $4,025
C) $1,750
D) $3,150
E) $4,725
6) Fox Manufacturing is a small textile manufacturer using machine-hours as the single indirect cost allocation rate to allocate indirect manufacturing costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Maize High School Science Olympiad job.
CompanyMaize High School Job
Direct materials$50,000$500
Direct manufacturing labour$10,000$100
Manufacturing overhead costs$40,000
Machine-hours100,000 mh800 mh
Required:
a.For Fox Manufacturing, determine the annual manufacturing indirect cost allocation rate.
b.Determine the amount of manufacturing overhead costs allocated to the Maize High School job.
c.Determine the estimated total manufacturing costs for the Maize High School job.
7) Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department. At the beginning of 2012, the following estimates were provided for the coming year:
MachiningAssembly
Direct labour hours10,000 dlh90,000 dlh
Machine hours100,000 mh5,000 mh
Direct labour cost$80,000$720,000
Manufacturing overhead costs$250,000$360,000
The accounting records of the company show the following data for Job #846:
MachiningAssembly
Direct labour hours50 dlh120 dlh
Machine hours170 mh10 mh
Direct material cost$2,700$1,600
Direct labour cost$400$900
Required:
a.Compute the manufacturing indirect cost allocation rate for each department.
b.Compute the total cost of Job #846.
c.Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.
