Ortega Manufacturing Company produced 600 units of inventory inJanuary 2014. The company expects to produce an additional 6,400units of inventory during the remaining 11 months of the year, fora total estimated production of 7,000 units in 2014. Directmaterials and direct turning overhead cost during the accountingperiod.
Indirectmaterials $5,000
Depreciation onequipment $24,000
Utilities cost $10,000
Salaries of plant manager andstaff $96,000
Rental fee on manufacturingfacilities $19,000
Combine the individual overhead cost into a cost pool andcalculate a predetermined overhead rate assuming the cost driver isnumber of units.
Determine the estimated cost of 600 units of product made inJanuary.
Is the cost computed in requirements a actual or estimated?Could Ortega improve accuracy by waiting until December todetermine the cost of products? Identify two reasons that a managerwould want to know the cost of products in January. Discuss therelationship between accuracy and relevance as it pertains to thisproblem.
4-11B Latimer Manufacturing Company expects to make72,000 travel sewing kits during 20015. In January the company made1800 kits. Materials and labor cost for January were 7200 and 9000,respectively. In February, Latimer produced 2200 kits. Materialsand labor cost for February were 8800 and 11,000 respectively. Thecompany paid $144,000 for annual factory insurance on January 10,2015. Ignore other manufacturing overhead cost.
Assuming that Latimer desires to sell all sewing kits for costplus 20% of cost, what price should be charged for the kitsproduced in January and February?
4-12B Quigley Food Corporation makes two products from soybeans:cooking oil and cattle feed. From a standard batch of 100,000pounds of soybeans. Quigley produces 20,000 pounds of cooking oiland 80,000 pounds of cattle feed. Producing a standard batch cost$27,000. The sales prices per pound are $3,000 for cooking oil and$1.50 for cattle feed.
Allocate the joint product cost to the two products using weightas the allocation base.
Allocate the joint product cost to the two products using marketvalue as the allocation base.
5. Soochaw Company makes three models of jump drives in itsfactory: J512, J1G, and J4G. The expected overhead cost for thenext fiscal year are as follows:
Payroll for factorymanagers $120,000
Factory maintenancecost $60,000
Factoryinsurance $30,000
Total overheadcost $210,000
Soochaw uses labor hours as the cost driver to allocate overheadcost. Budget labor hours for the products are as follows:
J512 1,600 hours
J1G 750 hours
J4G 650 hours
Total laborhours 3,000
Allocate the budget overhead cost to the products.
Provide a possible explanation as to why Soochaw chose laborhours instead of machine hours, as the allocation base.
Ortega Manufacturing Company produced 600 units of inventory inJanuary 2014. The company expects to produce an additional 6,400units of inventory during the remaining 11 months of the year, fora total estimated production of 7,000 units in 2014. Directmaterials and direct turning overhead cost during the accountingperiod.
Indirectmaterials $5,000
Depreciation onequipment $24,000
Utilities cost $10,000
Salaries of plant manager andstaff $96,000
Rental fee on manufacturingfacilities $19,000
Combine the individual overhead cost into a cost pool andcalculate a predetermined overhead rate assuming the cost driver isnumber of units.
Determine the estimated cost of 600 units of product made inJanuary.
Is the cost computed in requirements a actual or estimated?Could Ortega improve accuracy by waiting until December todetermine the cost of products? Identify two reasons that a managerwould want to know the cost of products in January. Discuss therelationship between accuracy and relevance as it pertains to thisproblem.
4-11B Latimer Manufacturing Company expects to make72,000 travel sewing kits during 20015. In January the company made1800 kits. Materials and labor cost for January were 7200 and 9000,respectively. In February, Latimer produced 2200 kits. Materialsand labor cost for February were 8800 and 11,000 respectively. Thecompany paid $144,000 for annual factory insurance on January 10,2015. Ignore other manufacturing overhead cost.
Assuming that Latimer desires to sell all sewing kits for costplus 20% of cost, what price should be charged for the kitsproduced in January and February?
4-12B Quigley Food Corporation makes two products from soybeans:cooking oil and cattle feed. From a standard batch of 100,000pounds of soybeans. Quigley produces 20,000 pounds of cooking oiland 80,000 pounds of cattle feed. Producing a standard batch cost$27,000. The sales prices per pound are $3,000 for cooking oil and$1.50 for cattle feed.
Allocate the joint product cost to the two products using weightas the allocation base.
Allocate the joint product cost to the two products using marketvalue as the allocation base.
5. Soochaw Company makes three models of jump drives in itsfactory: J512, J1G, and J4G. The expected overhead cost for thenext fiscal year are as follows:
Payroll for factorymanagers $120,000
Factory maintenancecost $60,000
Factoryinsurance $30,000
Total overheadcost $210,000
Soochaw uses labor hours as the cost driver to allocate overheadcost. Budget labor hours for the products are as follows:
J512 1,600 hours
J1G 750 hours
J4G 650 hours
Total laborhours 3,000
Allocate the budget overhead cost to the products.
Provide a possible explanation as to why Soochaw chose laborhours instead of machine hours, as the allocation base.
Related questions
13 Allocating to smooth cost over varying levels of productionLO 12-3
Production workers for Kennedy Manufacturing Company provided320 hours of labor in January and 660 hours in February. Kennedyexpects to use 4,000 hours of labor during the year. The rental feefor the manufacturing facility is $12,000 per month. |
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| Based on this information, how much of the rental cost should beallocated to the products made in January and to those made inFebruary? MONTH ALLOCATED COST JANUARY _________________ FEBRUARY _________________ 10 Pooling overhead cost LO12-2
Determine the amount of the fringe benefits cost to be allocatedto Division A and to Division B. DIVISION ALLOCATED COST A __________________ B __________________ Desired profit LO 11-5
NUMBER OF T-SHIRTS SOLD 7,000 7,500 8,000 8,500 9,000 TOTAL COST OF SHIRTS _______ ________ ___________ _______________________ COSTS PER SHIRT _______ ________ ___________ ________________________
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| TOTAL COST OF CONCERT ________ _________ _________ __________________ COST PER PERSON _________ _________ _________ ___________________
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