Question : Answer the following questions using the information below: Gibson Manufacturing a : 1217173

 

Answer the following questions using the information below:

 

Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.

 

CompanyWinfield High School Job

Direct materials              $40,000              $1,000

Direct labor              $10,000              $200

Manufacturing overhead costs              $30,000

Machine-hours              100,000              mh              900              mh

 

11) For Gibson Manufacturing, what is the annual manufacturing overhead cost-allocation rate?

A) $0.50

B) $0.80

C) $0.30

D) $33.33

12) What amount of manufacturing overhead costs will be allocated to this job?

A) $270

B) $720

C) $450

D) $30,000

 

13) What are the total manufacturing costs of this job?

A) $1,200

B) $1,470

C) $1,650

D) $1,920

 

14) What is the bid price for the Winfield High School job if the company uses a 40% markup of total manufacturing costs?

A) $2,310

B) $588

C) $1,680

D) $2,058

Answer the following questions using the information below:

 

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:

 

Department ADepartment B

Direct materials              $700,000              $100,000

Direct manufacturing labor              $200,000              $800,000

Manufacturing overhead              $600,000              $400,000

 

The actual material and labor costs charged to Job #432 were as follows:

 

Total

Direct materials:              $25,000

Direct labor:

Department A              $ 8,000

Department B              $12,000

              $20,000

 

Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year.

 

15) For Department A, the manufacturing overhead allocation rate is:

A) 33%

B) 66%

C) 300%

D) 100%

 

16) For Department B, the manufacturing overhead allocation rate is:

A) 50%

B) 100%

C) 200%

D) 300%

17) Manufacturing overhead costs allocated to Job #432 total:

A) $30,000

B) $12,000

C) $24,000

D) $36,000

 

Answer the following questions using the information below:

 

Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 20X3:

 

BudgetActual

Indirect costs              $270,000              $300,000

Annual salary of each attorney              $100,000              $110,000

Annual salary of each paraprofessional              $ 29,000              $ 30,000

Total professional labor-hours              50,000              dlh              60,000dlh

 

18) What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour?

A) $27.00; $4.17

B) $29.80; $5.40

C) $32.40; $5.00

D) $27.00; $5.00

19) How much should a client be billed in a normal costing system when 1,000 professional labor-hours are used?

A) $32,000

B) $29,800

C) $35,200

D) $27,000

C) [($100,000 × 12) + ($29,000 × 10)] / 50,000 × 1,000              = $29,800

+ $270,000 / 50,000 × 1000 × 1,000              =   $5,400

    $29,800 + $5,400              = $35,200

 

20) When a normal costing system is used, clients using proportionately more attorney time than paraprofessional time will:

A) be overbilled for actual resources used

B) be underbilled for actual resources used

C) be billed accurately for actual resources used

D) result in an underallocation of direct costs