Assignment 3
ACCT 301
1. Discuss the Treatment of Normal and Abnormal Spoilage under Job Costing.
2. PNG Corporation designs and builds roller coasters for amusement parks. At the end of 20x1, managers estimated overhead costs for 20x2 of $150,000 based on expected production of 5 roller coasters (5 jobs) using 5,000 labor hours each. Actual overhead costs for 20x2 were $170,000. PNG actually designed and built 6 roller coasters (6 jobs) with the following direct labor usage and overhead costs:
Actual Overhead Cost actual Labor Hours
The Big Dipper (job 1) $28,000 3,500
The Ultimate Scream (job 2) 35,000 4,000
Loop Me (job 3) 27,000 5,000
The Screaming Chicken (job 4) 40,000 2,500
You Don't Know Coasters (job 5) 25,000 6,000
Old Faithful (job 6) 15,000 4,500
Assume PNG uses a normal costing system with the number of labor hours as the overhead allocation base.
a. Calculate the allocation rate for 20x2.
b. Calculate the total corporate over- or under applied overhead (specify which) for 20x2.
3. Following are production data for a process costing system.
Beginning work in process, 30% complete 12,000 units
Started 90,000 units
Ending work in process, 70% complete 8,000 units
Costs:
Beginning work in process:
Direct Materials $28,800
Conversion costs 5,220
Materials used during the period 216,000
Conversion costs incurred during the period 139,200
a. Using the FIFO basis, prepare a process costing report.
b. Write out the journal entries for the costs incurred and the work performed this period under the FIFO method.
4. Explain the differences between the weighted average and FIFO process costing methods