In: Accounting
5) The Johny Pickles Brewing Company takes custom orders for seasonal brews and has two separate departments, brewing and packaging. The brewing department allocates overhead based on batches produced while the packaging department allocates overhead to orders based on machine hours worked in the department. The estimated overhead for the brewing department for the year is $18532 and the packaging department is estimated at $14413. It is estimated that the brewery will produce 253 batches during the year and will spend 1393 hours running the equipment to package those batches.
At the end of the year, it is determined that 306 batches were actually produced and 1494 were used to package the product. The overhead amounts actually incurred by the brewing and packaging departments were $17664 and $12500 respectively.
What is the entry into the overhead account at the end of the year to balance the account? A credit would be entered as a negative and a debit as a positive. Round your answer to the whole dollar.
6) Hippity Hoppity Brew is a manufacturer of Small, Medium and Large size malting equipment for use in craft breweries across the United States and Canada. They are implementing an activity based cost (ABC) system and have compiled the following indirect cost information.
Cost Pool | Estimated Cost | Cost Driver | Est Total Cost Driver |
Equipment Maintenance | $58813 | Machine Hours | 1500 Hours |
Production Facility Costs | $84262 | Footprint (sqft) | 20000 Square Feet |
Order Processing Costs | $15261 | Num of Orders | 200 Orders |
Engineering Changes | $34678 | Num of Changes | 50 Changes |
Customer Relations | $18678 | Warranty Claims | 30 Claims |
During the period, the Medium sized equipment line at Hippity Hoppity Brew used 650 machine hours, used 6200 square feet of floor space, received 63 orders, experienced 13 engineering changes and had 8 warranty claims. $121058 of direct labor and $72300 of direct material were charged towards the Medium sized equipment line during the year.
Under the ABC system, how much indirect cost was charged to the Medium line during the year? round your answer to the whole dollar.
7) Hippity Hoppity Brew is a manufacturer of Small, Medium and Large size malting equipment for use in craft breweries across the United States and Canada. They are implementing an activity based cost (ABC) system and have compiled the following indirect cost information.
Cost Pool | Estimated Cost | Cost Driver | Est Total Cost Driver |
Equipment Maintenance | $56347 | Machine Hours | 1500 Hours |
Production Facility Costs | $83518 | Footprint (sqft) | 20000 Square Feet |
Order Processing Costs | $25299 | Num of Orders | 200 Orders |
Engineering Changes | $36122 | Num of Changes | 50 Changes |
Customer Relations | $27915 | Warranty Claims | 30 Claims |
During the period, the Medium sized equipment line at Hippity Hoppity Brew used 650 machine hours, used 6200 square feet of floor space, received 63 orders, experienced 13 engineering changes and had 8 warranty claims. $124560 of direct labor and $65776 of direct material were charged towards the Medium sized equipment line during the year.
Under the ABC system, how much total cost was charged to the Medium line during the year? round your answer to the whole dollar.
8) Sammy Skillet is hoping to make $3.51 on every gourmet breakfast bowl he sells at his recently opened restaurant. If his desired selling price is $7.73 per breakfast bowl, under the target pricing model, what are Sammy Skillet's target costs per breakfast bowl? Calculate your answer to two decimal places.
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6 | Requirement | ||||
Under the ABC system calculation of how much total cost was charged to Medium Line during the year | |||||
Direct Material | $72,300 | ||||
Direct labour | $121,058 | ||||
Manufacturing Overhead | |||||
Equipment maintenance ($58813/1500*650 Hrs) | $24,486 | ||||
Production facility Costs($84262/20000*6200) | $26,121 | ||||
Order Processing Costs($15261/200*63) | $4,807 | ||||
Engineering Charges($34678/50*13) | $9,016 | ||||
Customer Relation($18678/30*8) | $4,981 | ||||
Total Cost Charged to Medium Line | $262,769 | ||||
7 | Requirement | ||||
Under the ABC system calculation of how much total cost was charged to Medium Line during the year | |||||
Direct Material | $65,776 | ||||
Direct labour | $124,560 | ||||
Manufacturing Overhead | |||||
Equipment maintenance ($56347/1500*650 Hrs) | $24,417 | ||||
Production facility Costs($83518/20000*6200) | $25,891 | ||||
Order Processing Costs($36122/200*63) | $11,378 | ||||
Engineering Charges($36122/50*13) | $9,392 | ||||
Customer Relation($27915/30*8) | $7,444 | ||||
Total Cost Charged to Medium Line | $268,858 | ||||
8 | The target cost is an approach in which companies set targets for its cost based on the rice | ||||
relevant in the market and profit margin they want to earn | |||||
So target Cost | Selling Price-Profit Margin | ||||
Here target Cost | $7.73-$3.51 | ||||
$4.22 per breakfast Bowl | |||||
5 | Allocation of Overheads based on the factors for each department | ||||
Brewing Department | Packaging Department | ||||
Estimated OH | $18,532 | $14,413 | |||
Allocation Basis | Batches Produced | Machine Hrs | |||
batches | 253 | ||||
Machine Hrs | 1393 | ||||
OH /Batch | $73.25 | ||||
OH/Machine Hr | $10.35 | ||||
Based in these the Overheads are applied | |||||
Brewing Department | |||||
Actual Batches | 306 | ||||
OH Cost per Batch | $73.25 | ||||
Total Overhead | $22,414.50 | ||||
Actual OH Cost | $17,664 | ||||
Overhead Overapplied | $4,751.00 | ||||
Packaging Department | |||||
Actual Machine Hrs | 1494 | ||||
OH Cost Per Machine Hr | $10.35 | ||||
Total Overhead | $15,462.90 | ||||
Actual OH Cost | $12,500 | ||||
Overhead Overapplied | $2,962.90 | ||||
Journal Entry | |||||
In the Books of Brewing | |||||
Manufacturing Overhead A/C | $4,751.00 | ||||
To Cost of Goods Sold | $4,751.00 | ||||
To record the overapplied overhead | |||||
Journal Entry | |||||
In the Books of Packaging | |||||
Manufacturing Overhead A/C | $2,962.90 | ||||
To Cost of Goods Sold | $2,962.90 | ||||
To record the overapplied overhead | |||||
In both the cases there is overapplied overheads in both brewing and packaging department | |||||