Consider the following costs that were incurred during the current year

$19.00

Description



Note to
tutor: Please complete work in excel and show calculations
.




Problem
#1



Consider the following costs that were incurred during the current
year:


1. Tire costs incurred byFord Motor Company.


2. Sales commissions paid to the sales force ofDell
Inc.


3. Wood glue consumed in the manufacture ofThomasville
furniture.


4. Hourly wages of refinery security guards employedby
ExxonMobil Corporation.


5. The salary of a financial vice president ofHewlett
Packard.


6. Advertising costs ofCoca-Cola.


7. Straight-line depreciation on factory machinery ofBoeing
Corporation.


8. Wages of assembly-line personnel ofWhirlpool
Corporation.


9. Delivery costs on customer shipments ofBen
& Jerry’sice cream.


10. Newsprint consumed in printingThe New York Times.


11. Plant insurance costs ofTexas Instruments.


12. Glass costs incurred in light-bulb manufacturing ofGeneral
Electric.



Required:Evaluate each of the preceding and determine whether the cost is ( a ) a product cost or a


period cost, ( b )
variable or fixed in terms of behavior, and ( c ) for the product costs only, whether the


cost is properly classified as direct material, direct labor, or
manufacturing overhead. Item 1 is done as


an example:


Tire costs: Product cost, variable, direct material



















Problem
#2



Finlon
Upholstery, Inc. uses a job-order costing system to accumulate manufacturing
costs. The company’s


work-in-process
on December 31, 20×1, consisted of one job (no. 2077), which was carried on


the
year-end balance sheet at $156,800. There was no finished-goods inventory on
this date.


Finlon
applies manufacturing overhead to production on the basis of direct-labor cost.
(The


budgeted
direct-labor cost is the company’s practical capacity, in terms of direct-labor
hours,


multiplied
by the budgeted direct-labor rate.) Budgeted totals for 20×2 for direct labor
and manufacturing


overhead
are $4,200,000 and $5,460,000, respectively. Actual results for the year


follow.


Direct
material used ……………………………………………………………………………..
$ 5,600,000


Direct
labor
…………………………………………………………………………………………
4,350,000


Indirect
material used ……………………………………………………………………………
65,000


Indirect
labor
………………………………………………………………………………………
2,860,000


Factory
depreciation ……………………………………………………………………………..
1,740,000


Factory
insurance
………………………………………………………………………………..
59,000


Factory
utilities ……………………………………………………………………………………
830,000


Selling
and administrative expenses
………………………………………………………… 2,160,000


Total
………………………………………………………………………………………………
$17,664,000






Job
no. 2077 was completed in January 20×2; there was no work in process at
year-end. All jobs produced


during
20×2 were sold with the exception of job no. 2143, which contained
direct-material costs


of
$156,000 and direct-labor charges of $85,000. The company charges any under- or
overapplied overhead


to
Cost of Goods Sold.


Required:




1.
Determine the company’s predetermined overhead application rate.


2.
Determine the additions to the Work-in-Process Inventory account for direct
material used, direct


labor,
and manufacturing overhead.


3.
Compute the amount that the company would disclose as finished-goods inventory
on the


December
31, 20×2, balance sheet.


4.
Prepare the journal entry needed to record the year’s completed production.


5.
Compute the amount of under- or overapplied overhead at year-end, and prepare
the necessary


journal
entry to record its disposition.


6.
Determine the company’s 20×2 cost of goods sold.


7.
Would it be appropriate to include selling and administrative expenses in
either manufacturing




overhead or cost of goods sold? Briefly
explain.








Helpful Formulas



Predetermined


overhead rate


_


Budgeted manufacturing-overhead cost


_________ __ _______ ___ ______ ____ _____ ____


Budgeted amount of cost driver (or activity base)



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Consider the following costs that were incurred during the current year

$21.00

Description


Note to
tutor: Please complete work in excel and show calculations
.




Problem
#1



Consider the following costs that were incurred during the current
year:


1. Tire costs incurred byFord Motor Company.


2. Sales commissions paid to the sales force ofDell
Inc.


3. Wood glue consumed in the manufacture ofThomasville
furniture.


4. Hourly wages of refinery security guards employedby
ExxonMobil Corporation.


5. The salary of a financial vice president ofHewlett
Packard.


6. Advertising costs ofCoca-Cola.


7. Straight-line depreciation on factory machinery ofBoeing
Corporation.


8. Wages of assembly-line personnel ofWhirlpool
Corporation.


9. Delivery costs on customer shipments ofBen
& Jerry’sice cream.


10. Newsprint consumed in printingThe New York Times.


11. Plant insurance costs ofTexas Instruments.


12. Glass costs incurred in light-bulb manufacturing ofGeneral
Electric.



Required:Evaluate each of the preceding and determine whether the cost is ( a ) a product cost or a


period cost, ( b )
variable or fixed in terms of behavior, and ( c ) for the product costs only, whether the


cost is properly classified as direct material, direct labor, or
manufacturing overhead. Item 1 is done as


an example:


Tire costs: Product cost, variable, direct material



















Problem
#2



Finlon
Upholstery, Inc. uses a job-order costing system to accumulate manufacturing
costs. The company’s


work-in-process
on December 31, 20×1, consisted of one job (no. 2077), which was carried on


the
year-end balance sheet at $156,800. There was no finished-goods inventory on
this date.


Finlon
applies manufacturing overhead to production on the basis of direct-labor cost.
(The


budgeted
direct-labor cost is the company’s practical capacity, in terms of direct-labor
hours,


multiplied
by the budgeted direct-labor rate.) Budgeted totals for 20×2 for direct labor
and manufacturing


overhead
are $4,200,000 and $5,460,000, respectively. Actual results for the year


follow.


Direct
material used ……………………………………………………………………………..
$ 5,600,000


Direct
labor
…………………………………………………………………………………………
4,350,000


Indirect
material used ……………………………………………………………………………
65,000


Indirect
labor
………………………………………………………………………………………
2,860,000


Factory
depreciation ……………………………………………………………………………..
1,740,000


Factory
insurance
………………………………………………………………………………..
59,000


Factory
utilities ……………………………………………………………………………………
830,000


Selling
and administrative expenses
………………………………………………………… 2,160,000


Total
………………………………………………………………………………………………
$17,664,000






Job
no. 2077 was completed in January 20×2; there was no work in process at
year-end. All jobs produced


during
20×2 were sold with the exception of job no. 2143, which contained
direct-material costs


of
$156,000 and direct-labor charges of $85,000. The company charges any under- or
overapplied overhead


to
Cost of Goods Sold.


Required:




1.
Determine the company’s predetermined overhead application rate.


2.
Determine the additions to the Work-in-Process Inventory account for direct
material used, direct


labor,
and manufacturing overhead.


3.
Compute the amount that the company would disclose as finished-goods inventory
on the


December
31, 20×2, balance sheet.


4.
Prepare the journal entry needed to record the year’s completed production.


5.
Compute the amount of under- or overapplied overhead at year-end, and prepare
the necessary


journal
entry to record its disposition.


6.
Determine the company’s 20×2 cost of goods sold.


7.
Would it be appropriate to include selling and administrative expenses in
either manufacturing




overhead or cost of goods sold? Briefly
explain.








Helpful Formulas



Predetermined


overhead rate


_


Budgeted manufacturing-overhead cost


_________ __ _______ ___ ______ ____ _____ ____


Budgeted amount of cost driver (or activity base)



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Consider the following costs that were incurred during the current year

$15.00

Description



Note to
tutor: Please complete work in excel and show calculations
.




Problem
#1



Consider the following costs that were incurred during the current
year:


1. Tire costs incurred byFord Motor Company.


2. Sales commissions paid to the sales force ofDell
Inc.


3. Wood glue consumed in the manufacture ofThomasville
furniture.


4. Hourly wages of refinery security guards employedby
ExxonMobil Corporation.


5. The salary of a financial vice president ofHewlett
Packard.


6. Advertising costs ofCoca-Cola.


7. Straight-line depreciation on factory machinery ofBoeing
Corporation.


8. Wages of assembly-line personnel ofWhirlpool
Corporation.


9. Delivery costs on customer shipments ofBen
& Jerry’sice cream.


10. Newsprint consumed in printingThe New York Times.


11. Plant insurance costs ofTexas Instruments.


12. Glass costs incurred in light-bulb manufacturing ofGeneral
Electric.



Required:Evaluate each of the preceding and determine whether the cost is ( a ) a product cost or a


period cost, ( b )
variable or fixed in terms of behavior, and ( c ) for the product costs only, whether the


cost is properly classified as direct material, direct labor, or
manufacturing overhead. Item 1 is done as


an example:


Tire costs: Product cost, variable, direct material



















Problem
#2



Finlon
Upholstery, Inc. uses a job-order costing system to accumulate manufacturing
costs. The company’s


work-in-process
on December 31, 20×1, consisted of one job (no. 2077), which was carried on


the
year-end balance sheet at $156,800. There was no finished-goods inventory on
this date.


Finlon
applies manufacturing overhead to production on the basis of direct-labor cost.
(The


budgeted
direct-labor cost is the company’s practical capacity, in terms of direct-labor
hours,


multiplied
by the budgeted direct-labor rate.) Budgeted totals for 20×2 for direct labor
and manufacturing


overhead
are $4,200,000 and $5,460,000, respectively. Actual results for the year


follow.


Direct
material used ……………………………………………………………………………..
$ 5,600,000


Direct
labor
…………………………………………………………………………………………
4,350,000


Indirect
material used ……………………………………………………………………………
65,000


Indirect
labor
………………………………………………………………………………………
2,860,000


Factory
depreciation ……………………………………………………………………………..
1,740,000


Factory
insurance
………………………………………………………………………………..
59,000


Factory
utilities ……………………………………………………………………………………
830,000


Selling
and administrative expenses
………………………………………………………… 2,160,000


Total
………………………………………………………………………………………………
$17,664,000






Job
no. 2077 was completed in January 20×2; there was no work in process at
year-end. All jobs produced


during
20×2 were sold with the exception of job no. 2143, which contained
direct-material costs


of
$156,000 and direct-labor charges of $85,000. The company charges any under- or
overapplied overhead


to
Cost of Goods Sold.


Required:




1.
Determine the company’s predetermined overhead application rate.


2.
Determine the additions to the Work-in-Process Inventory account for direct
material used, direct


labor,
and manufacturing overhead.


3.
Compute the amount that the company would disclose as finished-goods inventory
on the


December
31, 20×2, balance sheet.


4.
Prepare the journal entry needed to record the year’s completed production.


5.
Compute the amount of under- or overapplied overhead at year-end, and prepare
the necessary


journal
entry to record its disposition.


6.
Determine the company’s 20×2 cost of goods sold.


7.
Would it be appropriate to include selling and administrative expenses in
either manufacturing




overhead or cost of goods sold? Briefly
explain.








Helpful Formulas



Predetermined


overhead rate


_


Budgeted manufacturing-overhead cost


_________ __ _______ ___ ______ ____ _____ ____


Budgeted amount of cost driver (or activity base)



Reviews

There are no reviews yet.

Be the first to review “Consider the following costs that were incurred during the current year”

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