Question : 21) Actual costing helps managers get information earlier and take : 1212060

 

21) Actual costing helps managers get information earlier and take corrective measures to improve labor efficiency.

 

22) The budgeted indirect cost rate is actual indirect costs divided by budgeted quantity of the cost allocation base.

 

23) Direct costs are traced the same way for actual costing and normal costing.

24) Normal costing assigns indirect costs based on an actual indirect-cost rate.

 

25) A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

 

26) For normal costing, even though the indirect-cost rate is based on actuals, indirect costs are allocated to products based on the normal capacity of the cost-allocation base.

27) Shotter Manufacturing is a small textile manufacturer using machine-hours to calculate the single indirect-cost rate to allocate manufacturing overhead costs to various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the jackets to be made for Jackson High School Science Olympiad.

 

CompanyJackson High School Job

Direct materials              $25,000              $600

Direct manufacturing labor              $5,000              $150

Manufacturing overhead costs              $30,000

Machine-hours (mh)              50,000              mh              800              mh

 

Required:

a.For Shotter Manufacturing, determine the annual manufacturing overhead cost-allocation rate.

b.Determine the amount of manufacturing overhead costs allocated to the Jackson High School job.

c.Determine the estimated total manufacturing costs for the Jackson High School job.

28) Toyz 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 labor-hours in the Assembly Department. At the beginning of 2014, the following estimates were provided for the coming year:

 

MachiningAssembly

Direct labor-hours (dlh)              10,000              dlh150,000              dlh

Machine-hours (mh)              100,000              mh              5,000              mh

Direct labor cost              $ 80,000              $720,000

Manufacturing overhead costs              $200,000              $450,000

 

The accounting records of the company show the following data for Job #897:

MachiningAssembly

Direct labor-hours (dlh)              50              dlh              120              dlh

Machine-hours (mh)              170              mh              10              mh

Direct material cost              $3,000              $1,600

Direct labor cost              $400              $1,500

 

Required:

a.Compute the manufacturing overhead allocation rate for each department.

b.Compute the total cost of Job #897.

c.Provide possible reasons why Toyz Manufacturing uses two different cost allocation rates. 

 

 

 

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