Question
In: Accounting
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses...
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a job-order costing system. The capacity of the plant is determined by the capacity of its constraint, which is time on the automated bandsaw that makes finely beveled cuts in wood according to the preprogrammed specifications of each cabinet. The bandsaw can operate up to 187 hours per month. The estimated total manufacturing overhead cost at capacity is $15,708 per month. The company bases its predetermined overhead rate on capacity, so its predetermined overhead rate is $84 per hour of bandsaw use.
The results of a recent month’s operations appear below:
| Sales | $ | 43,770 |
| Beginning inventories | $ | 0 |
| Ending inventories | $ | 0 |
| Direct materials | $ | 5,370 |
| Direct labor | $ | 8,890 |
| Manufacturing overhead incurred | $ | 14,270 |
| Selling and administrative expense | $ | 8,230 |
| Actual hours of bandsaw use | 157 | |
Required:
1-a. Prepare an income statement that records the cost of unused capacity on the income statement as a period expense.
1-b. How much of the cost of unused capacity can be shown on the income statement as a period expense?
Solutions
ekkarill92 answered 11 months agoRelated Solutions
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses...
Wixis Cabinets makes custom wooden cabinets for high-end stereo
systems from specialty woods. The company uses a job-order costing
system. The capacity of the plant is determined by the capacity of
its constraint, which is time on the automated bandsaw that makes
finely beveled cuts in wood according to the preprogrammed
specifications of each cabinet. The bandsaw can operate up to 180
hours per month. The estimated total manufacturing overhead cost at
capacity is $14,760 per month. The company bases...
Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses...
Wixis Cabinets makes custom wooden cabinets for high-end stereo
systems from specialty woods. The company uses a job-order costing
system. The capacity of the plant is determined by the capacity of
its constraint, which is time on the automated bandsaw that makes
finely beveled cuts in wood according to the preprogrammed
specifications of each cabinet. The bandsaw can operate up to 188
hours per month. The estimated total manufacturing overhead cost at
capacity is $15,228 per month. The company bases...
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Thanks,
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$
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$
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Depreciation on production equipment
$
32,000
Factory property taxes
$
18,200
Factory rent
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39,300
Glue
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$
23,900
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High End
Moderate
Sales Quantity
1,000
20,000
Sales
$8,000,000
$12,000,000
Cost of Goods Sold
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10,000,000
Gross Profit
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2,000,000
Marketing Costs
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Units
Total Etching Cost
1
14
$
27
2
11
$
20
3
16
$
30
4
10
$
20
5
12
$
25
6
15
$
28
78
$
150
For planning purposes, management would...
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makes prestige high-end custom watches in small lots. One of the
company’s products, a platinum diving watch, goes through an
etching process. The company has observed etching costs as follows
over the last six weeks:
Week
Units
Total Etching Cost
1
14
$
27
2
11
$
20
3
16
$
30
4
10
$
20
5
12
$
25
6
15
$
28
78
$
150
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$
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1,960
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18,200
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1,620
28,300...
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