accounts- IJMAC Industries

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Description

Machine hours and electricity costs for IJMAC Industries for 2013 were as follows:
Month
January
February
March
April
May
June
July
August
September
October
November
December

a.

Machine Hours
Electricity Costs
2,000
$
12,000
2,320
10,500
1,560
6,650
2,480
11,500
3,040
14,125
2,640
11,000
3,280
12,375
2,800
11,375
1,600
6,700
2,960
13,000
3,760
15,450
3,700
15,400
A. Using the high-low method, develop
an estimate of variable electricity costs
per machine hour.

Required: Transfer the information in the table above to an Excel spreadsheet and prepare the solutions to the
B. U the the high-low method, develop
following questions. Your solution should showsing appropriate formulas and the detailed calculations. In using
aand functions to show your understanding of basic Excel functions.
Excel, you should use appropriate formulas n estimate of fixed electricity costs per
month.
Clearly identify your answer to each question.
Month
January
February
March
April
May
June
July
August
September
October
November
December

a.

Machine Hours
Electricity Costs
2,000
$
1 develop
C. Using the high-low method,2,000
2,320
a cost function 10,500
for monthly electricity
1,560
6,650
costs.
2,480
11,500
3,040
14,125
2,640
11,000
3,280
12,375
2,800
11,375
1,600
6,700
D. Estimate electricity costs for a month
2,960
13,000 hours are
in which 3,000 machine
3,760
15,450
worked.
3,700
15,400
A. Using the high-low method, develop
an estimate of variable electricity costs
per machine hour.

B. Using the high-low method, develop
an estimate of fixed electricity costs per
month.

C. Using the high-low method, develop
a cost function for monthly electricity
costs.

Part 2.

Page 3
Job order costing

Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine
hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000
and machine hours would be 8,000.
The following information pertains to December of the current year:

Actual manufacturing overhead cost incurred in December was $61,000.
Jobs 10 and 12 were completed during December. Job 10 was sold to customer (see c below).

Required: Transfer the information in the table above to an Excel spreadsheet and prepare the solutions to the
following questions. Your solution should show the appropriate formulas and the detailed calculations. In using
Excel, you should use appropriate formulas and functions to show your understanding of basic Excel functions.
Clearly identify your answer to each question.
a. Compute the predetermined overhead application rate.

b. Determine the total cost associated with each job.
c. Jobs 10 and 12 were completed during the month. If job 10 was delivered to customers that paid $50,000
cash, what is the gross profit for job 10?
d. What is the cost assigned to ending work in process?
e. What is the cost assigned to ending finished goods?
f. How much was overhead over/under applied?

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