2024 – QUESTION 4 5 MARKS Estimated or budgeted cost and operating data for three companies for 2015 are
ACC00724 (Accounting For Managers), S2, 2015 – 2024
QUESTION 4 (5 MARKS)
Estimated or budgeted cost and operating data for three companies for 2015 are given below:
Company X Company Y Company Z
Units to be produced 10,000 8,000 12,000
Machine- hours 50,000 10,000 6,000
Direct labour- hours 12,000 16,000 36,000
Direct labour cost $48,000 $64,000 $150,000
Factory overhead cost 150,000 40,000 60,000
Predetermined overhead rates are calculated on the following bases in the three companies:
Overhead rate based on
Company X Machine-hours
Company Y Direct labour-hours
Company Z Direct labour cost
Required:
a. Calculate the predetermined overhead rate to be used in each company during 2015.
b. Assume that three jobs are worked on during 2015 in company X. Machine-hours recorded by jobs are: job 23, 21,000 hours; job 29, 16,000 hours; and job 31, 11,000 hours. How much overhead will the company apply to work in process? If actual overhead costs total $149,000 for 2015, will overhead be over- or under-applied? By how much?
QUESTION 5 (5 MARKS)
Tony’s Textile Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:
Men’s Boys’
Selling Price $28.80 Selling Price $24.00
Variable Cost $20.40 Variable Cost $16.80
Fixed costs are $38,400.
Required:
a. What is the breakeven point in units for each type of shirt, assuming the sales mix is 2:1 in favor of men’s shirts?
b. What is the operating income, assuming the sales mix is 2:1 in favor of men’s shirts, and sales total 9,000 shirts?
QUESTION 6 (5 MARKS)
The Wilson River Company uses a job order cost system.
The table below provides selected data on the three jobs worked on during the company’s first month of operations:
Job 101 Job 102 Job 103
Units of product in the job 2,000 1,800 1,500
Direct labor hours worked 1,200 1,000 600
Direct material cost 3,200 3,980 1,200
Direct labor cost 6,000 5,000 3,000
Actual overhead costs of $5,880 were incurred during the month. Manufacturing overhead is
applied to production on the basis of direct labor-hours at a predetermined rate of $2 per hour.
Jobs 101 and 102 were completed during the month, job 103 was not completed.
Required:
a. Calculate the amount of manufacturing overhead that would have been charged to each job
during the month.
b. Calculate the unit cost of jobs 101 and 102
c. What is the balance of Work-in-Process account at the end of the month?
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