Beginning goods in process inventory (March 31)

Units of product                                                                                                    30,000 units

Percentage of completion – Direct materials                                                      100%

Percentage of completion – Direct labor                                               65%

Direct materials costs                                                                                           $4,300

Direct labor costs                                                                                                  $ 700

Factory overhead costs applied                                                         $ 920

Activities during the current period (April)

Units started this period                                                                                      90,000 units

Units transferred out (completed)                                                                        100,000 units

Direct materials costs                                                                                           $ 12,900

Direct labor costs                                                                                                  $   6,700

Factory overhead costs applied                                                         $   7,680

Ending goods in process inventory (April 30)

Units of product                                                                                                    20,000

Percentage of completion – Direct materials                                                         100%

Percentage of completion – Direct labor                                                25%

Process Cost Summary

Weighted Average

Cost Charged to Production

Costs of beginning goods in process

     Direct Materials

     Direct Labor

     Factory Overhead

Costs incurred this period

     Direct materials

     Direct Labor

     Factory Overhead

Total costs to account for

Unit Cost Information

Units to accounts for:                                                                                            Units accounted for:

Beginning goods in process                                                                                   Completed and transferred out

Units started this period                                                                                                        Ending goods in process

Total units to account for                                                                                                       Total units accounted for

                                                                                                            Direct                        Direct                          Factory

Equivalents Units of Production (EUP)            Materials Labor                           Overhead

Units completed and transferred out

Units of ending goods in process

     Direct materials

     Direct labor

     Factory overhead

Equivalent units of production

                                                                                                            Direct                          Direct                          Factory

Cost per EUP                                                                                  Materials       Labor                           Overhead

Costs of beginning goods in process

Costs incurred this period

Total costs

/EUP

Cost per EUP

Cost Assignment and Reconciliation

Costs transferred out (COGM)

     Direct materials

     Direct labor

     Factory overhead

Costs of ending goods in process

     Direct materials

     Direct labor

     Factory overhead

Total costs accounted for

1. What is the equivalent units of production for direct materials?

2. What is the equivalent units of production for direct labor?

3. What is the equivalent units of production for factory overhead?

4. What is the cost per equivalent unit of production (4 decimals) for direct materials?

5. What is the cost per equivalent unit of production (4 decimals) for direct labor?

6. What is the cost per equivalent unit of production for factory overhead?

7. What is the cost of goods manufactured?

8. What is the cost of ending goods in process?

1. The Spurling Brigade Company produces custom widgets for its customers. The company uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based costing system.

   
   Activity Cost Pool         Total Cost       Total Activity

      Assembling……….....          $101,574        16,200 machine hours

      Job Support…………               32,724            1,800 jobs

      Customer support…...                 5,472 320 clients

      Other……………….              100,000 Not applicable                                        

   Total………………. $239,770
     
   The "Other" activity cost pool consists of costs of idle capacity & organization-sustaining costs. One particular customer, Vandal Inc., requested 32 jobs during the year for a total of 100 units, requiring a total of 192 machine hours. Each unit requires $0.40 in direct materials and $1.60 in direct labor. The customer was charged $2,200 for these jobs.
   Round off all calculations to the nearest whole cent.

2. A. Using ABC, compute the activity rate for the Assembling dept.

B. Using the same information for #10, compute the activity rate for Job Support.

C. Using the information for #10, compute the activity rate for Customer support.

D. Compute the total overhead cost charged to Vandal. Round to 2 decimal places.

E. Now compute the customer (gross) margin for Vandal Inc. rounding to 2 decimal places. Give as positive or negative number.

F. What is the (product) cost for Spurling to produce one unit for Vandal under ABC? Round to 2 decimal places. Give as positive number.

G. If Spurling used traditional costing instead of ABC and allocates based on machine hours, what would be the customer margin for Vandal Inc.? Give as positive or negative number. Round to 2 decimal places

Budgeted Income Statement and Supporting Budgets

The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for December:

Estimated sales for December:

Estimated inventories at December 1:

Desired inventories at December 31:

Direct materials used in production:

Anticipated cost of purchases and beginning and ending inventory of direct materials:

Direct labor requirements:

Estimated factory overhead costs for December:

Estimated operating expenses for December:

Estimated other income and expense for December:

Estimated tax rate: 30%

Required:

1. Prepare a sales budget for December.

2. Prepare a production budget for December. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

3. Prepare a direct materials purchases budget for December. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

4. Prepare a direct labor cost budget for December.

5. Prepare a factory overhead cost budget for December.

6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $29,000, and work in process at the end of December is estimated to be $35,400. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

7. Prepare a selling and administrative expenses budget for December.

8. Prepare a budgeted income statement for December. In the Other revenue and expense section, indicate expenses as negative amounts.

Feedback

Fmaedi698, Inc., manufactures and sells two products: Product G8 and Product O0. Historically, the firm has used a traditional costing system, with direct labor hours as an activity base, to allocated manufaturing overhead to products. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

The direct labor rate is $22.60 per DLH. The direct materials cost per unit for each product is given below:

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

Which of the following statements concerning the unit product cost of Product G8 is true? (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

a. The unit product cost of Product G8 under traditional costing is less than its unit product cost under activity-based costing by $316.17.

b. The unit product cost of Product G8 under traditional costing is greater than its unit product cost under activity-based costing by $196.09.

c. The unit product cost of Product G8 under traditional costing is less than its unit product cost under activity-based costing by $196.09.

d. The unit product cost of Product G8 under traditional costing is greater than its unit product cost under activity-based costing by $316.17.

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

2. Prepare On Company's statement of cost of goods manufactured for December.

3. Prepare On Company's income statement for December.

Manufacturing Income Statement, Statement of Cost of Goods Manufactured Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December: On Company Off Company Materials inventory, December 1 $58,780 $79,940 Materials inventory, December 31 (a) 90,330 Materials purchased 149,300 (a) Cost of direct materials used in production 157,530 (b) Direct labor 221,600 179,870 Factory overhead 68,770 89,530 Total manufacturing costs incurred in December (b) 517,210 Total manufacturing costs 560,760 709,870 Work in process inventory, December 1 112,860 192,660 Work in process inventory, December 31 95,220 (c) Cost of goods manufactured (c) 512,420 Finished goods inventory, December 1 99,340 89,530 Finished goods inventory, December 31 104,040 (d) Sales 866,420 799,400 Cost of goods sold (d) 517,210 Gross profit (e) (e) Operating expenses 112,860 (f) Net income (f) 177,470 Required: 1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers. Letter On Company Off Company a. $ $ b. $ $ c. $ $ d. $ $ e. $ $ f. $ $ 2. Prepare On Company's statement of cost of goods manufactured for December. On Company Statement of Cost of Goods Manufactured For the Month Ended December 31 Work in process inventory, December 1 $ Direct materials: Materials inventory, December 1 $ Purchases Cost of materials available for use $ Less materials inventory, December 31 Cost of direct materials used in production $ Direct labor Factory overhead Total manufacturing costs incurred during December Total manufacturing costs $ Less work in process inventory, December 31 Cost of goods manufactured $ 3. Prepare On Company's income statement for December. On Company Income Statement For the Month Ended December 31 Sales $ Cost of goods sold: Finished goods inventory, December 1 $ Cost of goods manufactured Cost of materials available for use $ Less finished goods inventory, December 31 Cost of goods sold Gross profit $ Operating expenses Net income $

Support activity cost allocation

Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table:

1. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly be used to allocate the maintenance costs.

No

Measures that can possibly be used to allocate the maintenance costs.

a. Number of service calls

b. Asset value

c. Department cost

d. None of the above

a

2. Based on your response to part (1), determine the total costs allocated from each support activity to the other activities using the reciprocal services method and the most appropriate cost driver for Maintenance.

3. Assume Jake’s Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Determine the total costs allocated from each support activity to the other activities.

Is it viable for the company to choose the direct method of cost allocation?

Yes

Which of the following supports your answer?

a. The direct cost allocation method is too simple and it is not accurate.

b. The difference between the direct cost allocation method and the reciprocal method is minimal and the direct method is easier.

c. The reciprocal method of cost allocation is more accurate and easier than the direct method.

d. None of the above.

b

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

2. Prepare On Company's statement of cost of goods manufactured for December.

3. Prepare On Company's income statement for December.

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

2. Prepare On Company's statement of cost of goods manufactured for December.

3. Prepare On Company's income statement for December.

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

2. Prepare On Company's statement of cost of goods manufactured for December.

3. Prepare On Company's income statement for December.