ACCOUNTING HOMEWORK HELP

2 SHORT exercises on accounting

JOB ORDER COSTING EXERCISE – BATCH

Calico Company makes gingham aprons and smocks. It uses job order costing to determine its product costs. It uses machine hours to apply overhead. For the fiscal year starting January 1, 2009, CC estimated that it would incur $1,600,000 in manufacturing overhead costs and that it would work 320,000 machine hours total during the year.

In the month of September, CC completed several batches, including Job 911-C which consisted of 20,000 butterscotch gingham aprons with rickrack. Job 911-C incurred direct material costs of $50,000, direct labor costs of $25,000, and used 12,000 machine hours to complete.

At the end of the year, CC had incurred total actual manufacturing overhead costs of $2,010,000 and had worked a total of 405,000 machine hours.

REQUIRED:

a) Determine the batch and the cost per unit of Job 911-C.

b) Determine whether manufacturing overhead is over- or underapplied and by how much.

OUTSIDE ACTIVITY – ACTIVITY-BASED COSTING

YOU WANT TO DETERMINE HOW THE SALARIES YOU ARE PAYING 4 EMPLOYEES REALLY SHOULD BE ALLOCATED TO THE PRODUCTS YOUR COMPANY MANUFACTURES. ALL BUT ONE IS PAID HOURLY. HERE ARE THEIR WAGES:

JOE BOG – $10.00/HOUR – ASSEMBLES PRODUCT A

NORMA JEAN – $12.00/HOUR – MECHANIC – REPAIRS AND MAINTAINS MACHINES

BILL BLASS – $20.00/HOUR – DESIGNS PRODUCTS

SAM HILL – $3,000/MONTH -PRODUCTION SUPERVISOR

IT HAS BEEN DETERMINED THAT ALL OF JOE’S WAGES WOULD BE ALLOCATED DIRECTLY TO PRODUCT A.

NORMA WORKS ON PRODUCTION MACHINES FOR SEVERAL DIFFERENT PRODUCTS. HER WAGES SHOULD BE ESTIMATED FOR THE TOTAL YEAR AND THEN ALLOCATED TO THE PRODUCTS BASED ON HOW MANY REPAIRS HAVE TO BE DONE ON THOSE MACHINES. FOR THE UPCOMING YEAR, HER TOTAL ESTIMATE WAGES ARE $24,000, AND YOU HAVE ESTIMATED THAT SHE WILL HAVE TO MAKE 300 REPAIRS, 50 OF WHICH WILL BE DONE ON PRODUCT A MACHINERY.

BILL BLASS’S WAGES ARE ALLOCATED BY THE NUMBER OF DESIGN CHANGES HE HAS TO MAKE ON PRODUCTS. IT IS ESTIMATED THAT HE WILL EARN $40,000, AND THAT HE WILL HAVE TO MAKE ABOUT 400 DESIGN CHANGES TOTAL, 20 OF WHICH WILL BE FOR PRODUCT A.

SAM, AS PRODUCTION SUPERVISOR, HAS WAGES ALLOCATED USING DIRECT LABOR HOURS. IT IS ESTIMATED THAT THE COMPANY WILL WORK 10,000 DIRECT LABOR HOURS IN THE UPCOMING YEAR. JOE IS THE ONLY DIRECT LABOR EMPLOYEE FOR PRODUCT A.

REQUIRED: ESTIMATE THE TOTAL LABOR COST FOR PRODUCT A. USE A 50-HOUR WORKWEEK FOR HOURLY EMPLOYEES.