Question
In: Accounting
When is by-product/scrap cost considered in setting the predetermined overhead rate in a job order costing system? When is cost not considered?
When is by-product/scrap cost considered in setting the predetermined overhead rate in a job order costing system? When is cost not considered?
Solutions
Expert Solution
If a company using job order costing produces a by-product or a scrap item continuously from normal production, the net realizable value of that by-product or scrap should be considered in setting the predetermined overhead rate. The estimated net realizable value of the by-product or scrap should be deducted from total estimated overhead costs in setting the rate. When the by-product or scrap is actually sold, its net realizable value should be credited to Manufacturing Overhead. If a company using job order costing only produces a by-product or a scrap item during a particular job, then the net realizable value of the byproduct/scrap should not be considered in setting the predetermined overhead rate. The net realizable value should be credited to the particular job that gave rise to the by-product/scrap.
Samantha Mae Cerdeño answered 2 years agoRelated Solutions
Basic Job Costing Project Reed Incorporated uses a job-order costing system and a predetermined overhead rate...
Basic Job Costing Project
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:
Job 10
Job 11
Job 12
Total
Work-in-process, Dec. 1
$16,000
$26,000
$38,000
$80,000
The following transactions took place during the month of
December:
1. Purchased raw...
The Savage Garden Company uses normal costing in its job-order cost system. The predetermined overhead rate...
The Savage Garden Company uses normal costing in its job-order
cost system. The predetermined overhead rate is 3 times the direct
labor cost. Job 70 was completed during 2019. This job was charged
$4,000 for direct materials, $2,000 for direct labor, and $6,000
for allocated overhead. The job consisted of 10 units. After the
job was completed, but before it was sent to Finished Goods, it was
determined that 2 of these units were spoiled.
If the 2 bad units...
Problem #4 Predetermined Overhead Rate Broadway Corporation uses job order costing with a predetermined overhead rate...
Problem #4 Predetermined Overhead Rate
Broadway Corporation uses job order costing with a predetermined
overhead rate based on machine hours to apply overhead. The
following costs were provided after Job 500 & 510 were
complete.
Given Estimated Annual Data:
Machine Hours 55,000 DL rate/hour $8
Unit Overhead 345,000 Support labor (4,000 hours) 17,000
Facility Overhead 150,000 Supervisor Salaries 36,000
Total Overhead 495,000
Beginning Inventory
Raw Materials and Supplies $10,500
Work in Process (Job 500 only) 54,000
Finished Goods 112,500
Purchases...
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Lupo Corporation uses a job-order costing system with a single
plantwide predetermined overhead rate based on machine-hours. The
company based its predetermined overhead rate for the current year
on the following data:
Total machine-hours
32,700
Total fixed manufacturing overhead cost
$294,300
Variable manufacturing overhead per
machine-hour
$ 2.00
Recently, Job T687 was completed with the following
characteristics:
Number of units in the job
10
Total machine-hours
20
Direct materials
$ 545
Direct labor cost
$1,090
If the company marks up...
Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Gerstein Corporation uses a job-order costing system with a
single plantwide predetermined overhead rate based on direct
labor-hours. The company based its predetermined overhead rate for
the current year on total fixed manufacturing overhead cost of
$90,000, variable manufacturing overhead of $3.70 per direct
labor-hour, and 50,000 direct labor-hours. The company recently
completed Job M800 which required 150 direct labor-hours.
The estimated total manufacturing overhead is closest to:
Multiple Choice
$90,000
$275,000
$185,000
$90,004
Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.
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 estimated
machine hours would be 10,000.The following information pertains to December of the current
year:Job 10Job 11Job 12TotalWork-in-process, Dec. 1$16,000$26,000$38,000$80,000December production activity:Materials requisitioned$ 4,000$ 4,800$ 7,200$16,000Direct labor cost$ 2,400$ 3,600$ 4,000$10,000Machine hours400 hrs.700 hrs.900 hrs.2000Labor hours120 hrs.180 hrs.200 hrs.500Actual manufacturing overhead cost incurred in
December was $61,000.Assuming...
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Lupo Corporation uses
a job-order costing system with a single plantwide predetermined
overhead rate based on machine-hours. The company based its
predetermined overhead rate for the current year on the following
data:
Total
machine-hours
32,300
Total fixed
manufacturing overhead cost
$
581,400
Variable
manufacturing overhead per machine-hour
$
2.00
Recently, Job T687 was
completed with the following characteristics:
Number
of units in the job
10
Total
machine-hours
40
Direct
materials
$
630
Direct labor
cost
$
1,260
If the company...
Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Dehner Corporation uses a job-order costing system with a single
plantwide predetermined overhead rate based on direct labor-hours.
The company based its predetermined overhead rate for the current
year on the following data:
Total direct labor-hours
78,000
Total fixed manufacturing overhead cost
$
460,200
Variable manufacturing overhead per direct labor-hour
$
5.00
Recently, Job P951 was completed with the following
characteristics:
Number of units in the job
50
Total direct labor-hours
100
Direct materials
$
710
Direct labor cost
$...
Harootunian Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Harootunian Corporation uses a job-order costing system with a
single plantwide predetermined overhead rate based on
machine-hours. The company based its predetermined overhead rate
for the current year on the following data: Total machine-hours
80,000 Total fixed manufacturing overhead cost $ 312,000 Variable
manufacturing overhead per machine-hour $ 2.10 Recently, Job T629
was completed with the following characteristics: Number of units
in the job 50 Total machine-hours 200 The estimated total
manufacturing overhead is closest to what?
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...
Lupo Corporation uses a job-order costing system with a single
plantwide predetermined overhead rate based on machine-hours. The
company based its predetermined overhead rate for the current year
on the following data:
Total machine-hours
32,000
Total fixed manufacturing overhead cost
$
352,000
Variable manufacturing overhead per machine-hour
$
3.00
Recently, Job T687 was completed with the following
characteristics:
Number of units in the job
10
Total machine-hours
40
Direct materials
$
675
Direct labor cost
$
1,350
If the company...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The tires of a car make 78 revolutions as the car reduces its speed uniformly from...
- Cornerstone Exercise 4.1 (Algorithmic) Applied Overhead and Unit Overhead Cost: Plantwide Rates Seco, Inc., produces two...
- 1. Price Discrimination - Two Parts Pricing: Xerox In early days, the Xerox Corporation faced the...
- answer the following using C# Design and program a Visual Studio Console project in C# that...
- Write a program that acts as a basic calculator Assume the starting result is 0 Ask...
- Explain the following business terms: Explain what attestation means in business. Explain what assurance means in...
- Write a program to carry out the stated task: When one of the buttons is pressed,...
ADVERTISEMENT