Predetermined Overhead Rate, Application of Overhead to Jobs, Job Cost, Unit Cost

On August 1, Cairle Company’s work-in-process inventory consisted of three jobs with the following costs:

During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows:

Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold.

Required:

1. Calculate the predetermined overhead rate based on direct labor cost.
% of direct labor cost.

2. Calculate the ending balance for each job as of August 31.

3. Calculate the ending balance of Work in Process as of August 31.
$

4. Calculate the cost of goods sold for August.
$

5. Assuming that Cairle prices its jobs at cost plus 25 percent, calculate Cairle’s sales revenue for August.
$

In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances. A cost variance is the difference between a budgeted cost and an actual cost. Magee describes the following situation:

Michael Bitner has responsibility for control of two manufacturing processes. Every week he receives a cost variance report for each of the two processes, broken down by labor costs, materials costs, and so on. One of the two processes, which we'll call process A , involves a stable, easily controlled production process with a little fluctuation in variances. Process B involves more random events: the equipment is more sensitive and prone to breakdown, the raw material prices fluctuate more, and so on.

     "It seems like I'm spending more of my time with process B than with process A," says Michael Bitner. "Yet I know that the probability of an inefficiency developing and the expected costs of inefficiencies are the same for the two processes. It's just the magnitude of random fluctuations that differs between the two, as you can see in the information below."

     "At present, I investigate variances if they exceed $2,659, regardless of whether it was process A or B. I suspect that such a policy is not the most efficient. I should probably set a higher limit for process B."

The means and standard deviations of the cost variances of processes A and B, when these processes are in control, are as follows: (Round your z value to 2 decimal places and final answers to 4 decimal places.):

Furthermore, the means and standard deviations of the cost variances of processes A and B, when these processes are out of control, are as follows:

(a) Recall that the current policy is to investigate a cost variance if it exceeds $2,659 for either process. Assume that cost variances are normally distributed and that both Process A and Process B cost variances are in control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which in-control process will be investigated more often.

(Click to select)Process AProcess B is investigated more often

(b) Assume that cost variances are normally distributed and that both Process A and Process B cost variances are out of control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which out-of-control process will be investigated more often.

(Click to select)Process BProcess A is investigated more often.

(c) If both Processes A and B are almost always in control, which process will be investigated more often.

(Click to select)Process AProcess B will be investigated more often.

(d) Suppose that we wish to reduce the probability that Process B will be investigated (when it is in control) to .3121. What cost variance investigation policy should be used? That is, how large a cost variance should trigger an investigation? Using this new policy, what is the probability that an out-of-control cost variance for Process B will be investigated?

The records of ABC Company showed the following:

The physical inventory reveals 15,000 units on hand on December 31.
Compute the cost of ending inventory and cost of sales using:

Cost of Production Report: Average Cost Method

Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:

Required:

Prepare a cost of production report, using the average cost method, and identify the missing amounts for Work in Process—Roasting Department. If required, round your cost per equivalent unit answer to two decimal places.

Sitcom Technology Case

Case Study: Cost Concept and Cost Sheet

Sitcom Technology was founded by two IIT graduates Rehan and Nixit in the year 2016 with the objective of providing IT solutions to various companies. They launched their FinTech start-up after getting funded Rs 25,00,000 by Business Ventures, one of the FinTech Angel investors. This was in the form of a loan at a 12% rate of interest.

Rehan utilized his unused two bedrooms flat in Bannerghatta, Karnataka worth Rs 60,00,000 for the office. Although he could get Rs 20,000 per month as rent for the same in the market, he rented it out to his start-up at Rs 15,000 per month and also decided to waive off the security deposit of Rs 100,0000 (going rate).

The other assets bought for their enterprise were four computers and a server (Rs. 200,000), two printers come scanner (Rs 18,000), two cordless phones & four mobiles (Rs 62,000), modem for wifi and other internet accessories (Rs 6000)and office furniture (Rs 1,70,000). After purchasing the furniture, they realized that Rs 20,000 invested in panel doors couldn’t be used. There was no return or refund for that. With no other option in hand, they sold these doors as scrap for Rs 8,000. Besides these purchases, they also invested Rs 40,000 in annual licenses for a lot of software.

Nixit picked up two of his juniors as Programmer and Visualizer come graphic designer after negotiating heavily on their hourly remuneration of 1,000 per hour on a freelancing basis. Depending on the number of hours invested in the development of a particular software/ERP/IT Solution, they were paid. In the month of April 2019, Sitcom Technology paid them Rs 84,000 for 42 hours of work put in by each one of them.

In addition to these two, a telephone operator and a data entry staff were also hired at Rs 13,000 and Rs 17,000 per month respectively. The monthly expenses of Sitcom Technology in April 2019 were:

In April 2019, Sitcom Technology received two big project orders from a leading private bank and one small programming work outsourced by a major IT company in Electronic City. The work was completed in the same month with all four of them putting in a lot of hours. The revenue generated from these three projects was Rs 4,10,000.

Question: Prepare the cost sheet for April 2019 and calculate the profit generated assuming the depreciation on fixed assets to be 10%.

NOTE- could you please provide me the solution ASAP.

Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation
Assume a Jimmy John's restaurant has the following information available regarding costs at representative levels of monthly sales:

(a) Identify each cost as being variable, fixed, or mixed.

Cost of food sold:

Variable

Fixed

Mixed

Wages and fringe benefits:

Variable

Fixed

Mixed

Fees paid delivery help:

Variable

Fixed

Mixed

Rent on building:

Variable

Fixed

Mixed

Depreciation on equipment:

Variable

Fixed

Mixed

Utilities

Variable

Fixed

Mixed

Supplies (soap, floor wax, etc.):

Variable

Fixed

Mixed

Administrative costs:

Variable

Fixed

Mixed

(b) Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.

Round variable cost answers to two decimal places.

* where X = Unit sales

(c) Predict total costs for a monthly sales volume of 10,000 units.
$Answer

elow is selected information from Chipset's cost of production report:

The ending inventory of work-in-process is complete as to materials.

The cost of conversion in the ending inventory is:

Manning Manufacturing produces small microwaves.

Required:

Identify the following costs as PRODUCT COST or PERIOD COST. for product cost, indicate whether it is direct materials (DM), direct labor (DL), manufacturing overhead (MOH). For a period cost, indicate whether it is selling or administrative.

EXTRA CREDIT: Indicate whether the cost is variable (V) or fixed (F) with respect to behavior.

A. Commissions paid to salespeople
B. Straight-line depreciation on the factory building
C. Salary of the plant supervisor
D. Wages of the assembly-line workers
E. Machine lubricant used in production activities
F. Metal used in making the boats
G. Advertising placed in trade journals
H. Lease payments for the president's automobile
I. Property taxes paid on the factory facilities

J. Straight line depreciation on the office copy machine

K. Salary of the office janitor

L. Salary of the factory janitor

M. Cost of boxes used in shipping the boats to customers

USE OF AVERAGE COST METHOD

Capital cost ($) Annual operating cost ($) Lifetime (years) Salvage value ($) Annual electricity supplied (MWh) 300 000 27 200 25 40 000 400 1.1 Using the table above, calculate the lifecycle cost of the technology over an assessment period of 25 years at a real discount rate of 5% 1.2 Calculate the average unit cost of the power in present value terms (in cents/kWh) supplied by the technology over its lifetime at this real discount rate. 1.3 What is the corresponding Levelised Cost of Electricity (LCOE) (in cents/kWh)? Why is this value higher than that obtained in question 1.2