As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. Job 102 Job 103 Job 104 Direct materials $ 17,000 $ 64,000 $ 57,000 Direct labor 13,000 29,500 45,000 Overhead 6,240 14,160 21,600 Job 102 was started in production in May and the following costs were assigned to it in May: direct materials, $10,000; direct labor, $3,100; and overhead, $1,488. Jobs 103 and 104 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 are finished in June, and Job 104 is expected to be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months). 1. What is the cost of the raw materials requisitioned in June for each of the three jobs? (Omit the "$" sign in your response.) Job 102 $ Job 103 $ Job 104 $ 2. How much direct labor cost is incurred during June for each of the three jobs? (Omit the "$" sign in your response.) Job 102 $ Job 103 $ Job 104 $ 3. What predetermined overhead rate is used during June? (Omit the "%" sign in your response.) Predetermined overhead rate % 4. How much total cost is transferred to finished goods during June? (Omit the "$" sign in your response.) Total transferred cost $

Cost allocation is often the centerpiece of conflict that is resolved in court cases. The litigation usually involves the dispute over how costs are allocated to a product or product line that is of interest to the plaintiff. This is particularly an issue when a company produces some products or services for a price-competitive market while other products or services are produced for a governmental unit on a cost-plus or reimbursement basis.

Nursing Care Inc., or NCI, operates both a small nursing home and retirement home. There is a single kitchen used to provide meals to both the nursing home and retirement home, meaning labor costs and utilities costs of the kitchen are shared by the two homes. There is also a centralized cleaning department that provides the cleaning services for both homes as well as the kitchen. The nursing home serves only indigent patients who are on Medicaid. The state Department of Health and Family Services (DHFS) reimburses NCI at Medicaid-approved cost reimbursement rates. The Medicaid reimbursement rates are based on cost information supplied by NCI. The relevant cost and allocation data for the most recent year appear in the following table.

Required:

1. Management of NCI currently allocates the kitchen and cleaning department costs based on the number of residents in each home. Determine the amount of service department costs assigned to each of the homes using this allocation base. (Round percentages to two decimal places in your calculations.)

2. DHFS auditors believe the step method of allocation should be used by first assigning cleaning costs based on square feet and then kitchen costs based on number of residents. Determine the amount of service department costs assigned to each of the homes using this allocation method. (Do not round percentage answers.)

If merchandise inventory is being valued at cost and the price level is decreasing, which of the three methods of costing--LIFO, FIFO, or weighted average will yield

a. the highest inventory cost

b. the lowest inventory cost

c. the highest gross profit

d. the lowest gross profit

2. A manufacturer shipped merchandise to a retailer on a consignment basis. If the merchandise is unsold at the end of the period, in whose inventory should the merchandise be included?

1. What are the three major elements of a product's cost in a manufacturing company. Think of two real-life products and name costs that would go into making each of those products.

Equipment that cost $398,100 and has accumulated depreciation of $318,900 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance.

(a)

Calculate the gain to be recognized from the exchange.

What are the difficulties in determining appropriate cost allocation of a firms overhead costs?

If a product’s variable cost increases, the number of units needed to be sold to earn a target profit will:

25. An important application of regression in manufacturing is the estimation of cost of production. Based on DATA from Ajax Widgets relating cost (Y) to volume (X), what is the cost of producing 600 widgets?