iger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours.
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1 |
Variable costs: |
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2 |
Indirect factory wages |
$42,000.00 |
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3 |
Power and light |
26,880.00 |
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|
4 |
Indirect materials |
16,800.00 |
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|
5 |
Total variable cost |
$85,680.00 |
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6 |
Fixed costs: |
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7 |
Supervisory salaries |
$20,400.00 |
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|
8 |
Depreciation of plant and equipment |
35,400.00 |
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|
9 |
Insurance and property taxes |
15,600.00 |
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|
10 |
Total fixed cost |
71,400.00 |
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11 |
Total factory overhead cost |
$157,080.00 |
During May, the department operated at 8,740 hours, and the factory overhead costs incurred were indirect factory wages, $44,216; power and light, $28,240; indirect materials, $18,090; supervisory salaries, $20,400; depreciation of plant and equipment, $35,400; and insurance and property taxes, $15,600.
Use Correct Amount Descriptions
Depreciation of plant and equipment
Indirect factory wages
Indirect materials
Insurance and property taxes
Net controllable variance-favorable
Net controllable variance-unfavorable
Power and light
Supervisory salaries
Total controllable variances
Total factory overhead cost
Total factory overhead cost variance-favorable
Total factory overhead cost variance-unfavorable
Total fixed cost
Total variable cost
Volume variance-favorable
Volume variance-unfavorable
Required:
Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,740 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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Tiger Equipment Inc. |
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Factory Overhead Cost Variance Report—Welding Department |
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For the Month Ended May 31 |
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1 |
Normal capacity for the month |
8,400 hours |
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2 |
Actual production for the month |
8,740 hours |
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3 |
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4 |
Budget |
Actual |
Variances: Favorable |
Variances: Unfavorable |
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Variable costs: |
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Fixed costs: |
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In: Accounting
Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours.
|
1 |
Variable costs: |
||
|
2 |
Indirect factory wages |
$42,000.00 |
|
|
3 |
Power and light |
26,880.00 |
|
|
4 |
Indirect materials |
16,800.00 |
|
|
5 |
Total variable cost |
$85,680.00 |
|
|
6 |
Fixed costs: |
||
|
7 |
Supervisory salaries |
$20,400.00 |
|
|
8 |
Depreciation of plant and equipment |
35,400.00 |
|
|
9 |
Insurance and property taxes |
15,600.00 |
|
|
10 |
Total fixed cost |
71,400.00 |
|
|
11 |
Total factory overhead cost |
$157,080.00 |
During May, the department operated at 8,740 hours, and the factory overhead costs incurred were indirect factory wages, $44,216; power and light, $28,240; indirect materials, $18,090; supervisory salaries, $20,400; depreciation of plant and equipment, $35,400; and insurance and property taxes, $15,600.
Use Correct Amount Descriptions
Depreciation of plant and equipment
Indirect factory wages
Indirect materials
Insurance and property taxes
Net controllable variance-favorable
Net controllable variance-unfavorable
Power and light
Supervisory salaries
Total controllable variances
Total factory overhead cost
Total factory overhead cost variance-favorable
Total factory overhead cost variance-unfavorable
Total fixed cost
Total variable cost
Volume variance-favorable
Volume variance-unfavorable
Required:
Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,740 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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Tiger Equipment Inc. |
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Factory Overhead Cost Variance Report—Welding Department |
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For the Month Ended May 31 |
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1 |
Normal capacity for the month |
8,400 hours |
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2 |
Actual production for the month |
8,740 hours |
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3 |
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4 |
Budget |
Actual |
Variances: Favorable |
Variances: Unfavorable |
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5 |
Variable costs: |
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Fixed costs: |
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In: Accounting
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 12,000 hours for production:
| Variable overhead costs: | ||
| Indirect factory labor | $39,600 | |
| Power and light | 9,120 | |
| Indirect materials | 16,800 | |
| Total variable overhead cost | $ 65,520 | |
| Fixed overhead costs: | ||
| Supervisory salaries | $45,600 | |
| Depreciation of plant and equipment | 12,000 | |
| Insurance and property taxes | 22,400 | |
| Total fixed overhead cost | 80,000 | |
| Total factory overhead cost | $145,520 |
Tannin has available 16,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 11,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:
| Actual variable factory overhead costs: | |
| Indirect factory labor | $35,390 |
| Power and light | 8,210 |
| Indirect materials | 16,200 |
| Total variable cost | $59,800 |
Construct a factory overhead cost variance report for the Trim Department for July. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.
| Tannin Products Inc. | ||||
| Factory Overhead Cost Variance Report-Trim Department | ||||
| For the Month Ended July 31 | ||||
| Productive capacity for the month 16,000 hrs. | ||||
| Actual productive capacity used for the month 11,000 hrs. | ||||
| Budget (at actual production) | Actual | Favorable Variances | Unfavorable Variances | |
| Variable factory overhead costs: | ||||
| Indirect factory labor | $ | $ | $ | |
| Power and light | ||||
| Indirect materials | $ | |||
| Total variable factory overhead cost | $ | $ | ||
| Fixed factory overhead costs: | ||||
| Supervisory salaries | $ | $ | ||
| Depreciation of plant and equipment | ||||
| Insurance and property taxes | ||||
| Total fixed factory overhead cost | $ | $ | ||
| Total factory overhead cost | $ | $ | ||
| Total controllable variances | $ | $ | ||
| Net controllable variance-favorable | $ | |||
| Volume variance-unfavorable | ||||
| Idle hours at the standard rate for fixed factory overhead | ||||
| Total factory overhead cost variance-unfavorable | $ | |||
**THIS IS ALL THE AVAILABLE INFORMATION I HAVE. I DON'T HAVE ANY OTHER INFORMATION**
In: Accounting
Smokey and the Bandit produces outdoor activity clothing. The product line consists of pants, jackets, tops, and accessories. Data has been collected related to direct materials and direct labor for the four product lines. Smokey and the Bandit has also collected information on four possible cost drivers (units, batches, machine hours, labor hours). All this information is listed below. Construct a spreadsheet that will allocate overhead for each of these alternative drivers and will calculate the total per unit cost for each product line. Use the VLOOKUP function when constructing the spreadsheet so that you can determine the effect of different cost drivers on the overhead allocated and the resulting cost per unit.
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Product Line |
Units |
Average Sales Price per unit |
Total Material Cost |
Total Labor Cost |
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Pants |
4,600 |
$73 |
$234,600 |
$20,115 |
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Jackets |
2,500 |
$98 |
$145,000 |
$25,200 |
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Tops |
9,800 |
$36 |
$156,800 |
$32,970 |
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Accessories |
18,500 |
$12 |
$ 37,000 |
$15,210 |
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Product Line |
Batches |
Machine Hours |
Labor Hours |
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Pants |
42 |
1,640 |
1,341 |
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Jackets |
26 |
1,730 |
1,400 |
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Tops |
78 |
2,600 |
2,198 |
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Accessories |
95 |
2,250 |
845 |
Total overhead cost to be allocated: $321,560
After constructing your spreadsheet answer the following questions?
In: Accounting
Smokey and the Bandit produces outdoor activity clothing. The product line consists of pants, jackets, tops, and accessories. Data has been collected related to direct materials and direct labor for the four product lines. Smokey and the Bandit has also collected information on four possible cost drivers (units, batches, machine hours, labor hours). All this information is listed below. Construct a spreadsheet that will allocate overhead for each of these alternative drivers and will calculate the total per unit cost for each product line. Use the VLOOKUP function (show them) when constructing the spreadsheet so that you can determine the effect of different cost drivers on the overhead allocated and the resulting cost per unit.
|
Product Line |
Units |
Average Sales Price per unit |
Total Material Cost |
Total Labor Cost |
|
|
Pants |
4,600 |
$73 |
$234,600 |
$20,115 |
|
|
Jackets |
2,500 |
$98 |
$145,000 |
$25,200 |
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Tops |
9,800 |
$36 |
$156,800 |
$32,970 |
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Accessories |
18,500 |
$12 |
$ 37,000 |
$15,210 |
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Product Line |
Batches |
Machine Hours |
Labor Hours |
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Pants |
42 |
1,640 |
1,341 |
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Jackets |
26 |
1,730 |
1,400 |
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Tops |
78 |
2,600 |
2,198 |
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Accessories |
95 |
2,250 |
845 |
Total overhead cost to be allocated: $321,560
After constructing your spreadsheet answer the following questions?
In: Accounting
|
Standard quantity per system |
Standard cost per Kilogram or hour |
Standard cost per system |
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Direct materials |
4 Kilograms |
$3.25 |
$13.00 |
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Direct labor |
1.4 hours |
$11.00 |
15.40 |
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Variable overhead |
1.4 hours |
$4.00 |
5.60 |
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Fixed overhead |
1.4 hours |
$6.00 |
8.40 |
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Total standard cost per sucker |
$42.40 |
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The standards above were based on an expected annual volume of 8,000 systems Actual results for last year were as follows: |
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Number of systems produced |
8,200 |
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Direct labor-hours incurred |
11,610 |
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Kilograms of direct materials purchased |
38,300 |
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Kilograms of direct materials used in production |
35,260 |
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Total cost of direct materials purchased |
$126,390 |
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Total direct labor cost |
$131,040 |
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Total variable overhead cost |
$44,900 |
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Total fixed overhead cost |
$67,080 |
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Required:
Compute the following variances for Clear Water and comment on results.
A. Variable overhead efficiency variance.
B.Fixed overhead budget variance.
C.Fixed overheard volume variance
In: Accounting
21. The Paul Manufacturing Company uses the process cost system
and the average cost method. The following production
data are for the month of April, 2016.
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Production Costs |
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Work in process, beginning of month: |
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Materials |
$ 4,350 |
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Labor |
3,200 |
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Factory overhead |
1,902 |
$ 9,452 |
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Costs incurred during month: |
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Materials |
$43,200 |
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Labor |
32,304 |
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Factory overhead |
19,020 |
94,524 |
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Total |
$103,976 |
|
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Production Report |
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Units |
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In process, beginning of month |
500 |
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Finished and transferred during month |
11,900 |
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Work in process, end of month |
1,200 |
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Stage of completion |
65% |
Prepare a cost of production summary for the month.
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Paul Manufacturing Company |
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Cost of work in process, beginning of month: |
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Materials |
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Labor |
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Factory overhead |
$ |
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Cost of production for month: |
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Materials |
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Labor |
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Factory overhead |
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Total costs to be accounted for |
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Unit output for month: |
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Finished and transferred to finished goods during month |
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Equivalent units of work in process, end of month |
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( ) |
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Total equivalent production |
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Unit cost for month: |
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Materials [( ] |
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Labor [( ] |
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Factory overhead [( ] |
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Total |
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Inventory costs: |
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Cost of goods finished and transferred to finished goods |
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during month (11,900 × $8.20) |
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Cost of work in process, end of month: |
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Materials ( ) |
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Labor ( ) |
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Factory overhead ( ) |
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Total production costs accounted for |
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In: Accounting
Nowjuice, Inc., produces Shakewell fruit juice. A planner has developed an aggregate forecast for demand (in cases) for the next eight months.
|
month |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
|
forecast |
4500 |
4400 |
6200 |
6400 |
5800 |
6600 |
7200 |
6900 |
Use the following information to develop aggregate plans.
Regular production cost: $10.00 per case
Regular production capacity: 5,000 cases
Overtime production cost: $16 per case
Subcontracting cost: $20 per case
Holding cost: $1 per case per month
Beginning inventory: 0
Develop an aggregate plan using each of the following guidelines and compute the total cost for each plan. Which plan has the lowest total cost?
(a) Use level production of 5,000 case per month. Supplement using overtime as needed. (Ans. Total cost = $529,600)
(b) Use a combination of overtime (500 cases per month for the first five months), inventory, and subcontracting (500 cases per month from September due to the staff shortage) to handle variations in demand. Note that a proper amount of overtime for the last three months should be found to determine the total cost. (Ans. Total cost = $539,200)
(c) Which one is better?
In: Operations Management
Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these two product lines appear below:
| Xtreme | Pathfinder | |||||
| Selling price per unit | $ | 138.00 | $ | 90.00 | ||
| Direct materials per unit | $ | 64.40 | $ | 51.00 | ||
| Direct labor per unit | $ | 13.50 | $ | 9.00 | ||
| Direct labor-hours per unit | 1.5 | DLHs | 1.0 | DLHs | ||
| Estimated annual production and sales | 22,000 | units | 73,000 | units | ||
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
| Estimated total manufacturing overhead | $ | 2,438,000 | ||
| Estimated total direct labor-hours | 106,000 | DLHs | ||
Required:
1. Compute the product margins for the Xtreme and the Pathfinder products under the company’s traditional costing system.
2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs):
| Estimated Overhead Cost |
Expected Activity | |||||
| Activities and Activity Measures | Xtreme | Pathfinder | Total | |||
| Supporting direct labor (direct labor-hours) | $ | 646,600 | 33,000 | 73,000 | 106,000 | |
| Batch setups (setups) | 969,000 | 330 | 240 | 570 | ||
| Product sustaining (number of products) | 780,000 | 1 | 1 | 2 | ||
| Other | 42,400 | NA | NA | NA | ||
| Total manufacturing overhead cost | $ | 2,438,000 | ||||
Compute the product margins for the Xtreme and the Pathfinder products under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
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In: Accounting
FIFO Perpetual Inventory
The beginning inventory at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows:
| Date | Transaction | Number of Units |
Per Unit | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Apr. 3 | Inventory | 90 | $450 | $40,500 | ||||
| 8 | Purchase | 180 | 540 | 97,200 | ||||
| 11 | Sale | 120 | 1,500 | 180,000 | ||||
| 30 | Sale | 75 | 1,500 | 112,500 | ||||
| May 8 | Purchase | 150 | 600 | 90,000 | ||||
| 10 | Sale | 90 | 1,500 | 135,000 | ||||
| 19 | Sale | 45 | 1,500 | 67,500 | ||||
| 28 | Purchase | 150 | 660 | 99,000 | ||||
| June 5 | Sale | 90 | 1,575 | 141,750 | ||||
| 16 | Sale | 120 | 1,575 | 189,000 | ||||
| 21 | Purchase | 270 | 720 | 194,400 | ||||
| 28 | Sale | 135 | 1,575 | 212,625 | ||||
Required:
1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.
| Dunne Co. Schedule of Cost of Goods Sold FIFO Method For the Three Months Ended June 30 |
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|---|---|---|---|---|---|---|---|---|---|
| Purchases | Cost of Goods Sold | Inventory | |||||||
| Date | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost |
2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account.
| Record sale | |||
| Record cost | |||
3. Determine the gross profit from sales for the period. $
4. Determine the ending inventory cost as of June 30. $
5. Based upon the preceding data, would you expect the
ending inventory using the last-in, first-out method to be higher
or lower?
In: Accounting