Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Economics Expert

Accounting:Cost allocation and Overheads.

1.-Job order costing, cost drive rates. The Brinker company uses a job order costing system at its local plant. The plant has a machining department and a finishing department. The company uses machine hours to allocate machining department support cost to jobs and uses direct labor cost to allocate finishing department support costs to jobs. Estimates for 2006 are as Follows:

Machining department Finishing department

Manufacturing support cost $350,000 $280,000

Machine hours 14,000 1,400

Direct labor hours 3,500 15,400

Direct labor cost $105,000 $350,000

a. Determine the cost driver rate for each department.

b. During September 2006, cost records for job 101 show the following

Machining Department Finishing department

Direct material cost $8,000 $1,400

Direct Labor cost $250 $800

Direct labor hours 7 35

Machine hours 50 6

Determine the total cost charged to job 101 in September 2006.

2.- Single rate versus department rates. Western Wood Products has two production departments: Cutting and assembly. The company has been using a single predetermined cost driver rate based on plantwide direct labor hours. That is, the plantwide cost driver rate is computed by dividing plant wide support cost by total plantwide support costs by total plant direct labor hours. The estimates for support cost and quantities of cost drivers for 2006 follow:
Cutting Assembly Total
Manufacturing support $25,000 $35,000 $60,000
Direct labor hours 1,000 3,000 4,000
Machine hours 4,000 2,000 6,000

a. What was the single plantwide cost driver rate for 2006

b. Determine departmental cost driver rates based on direct labor hours for assembly and machine hours for cutting.

c. Provide reasons why Western Wood might use the method in (a) or in (b)

3.- Sequential allocation. Carleton Company has two service department and two production department. Information on annual manufacturing support cost and cost follows:

Service Department Production Department

Item S1 S2 P1 P2

Support costs $65,000 $55,000 $160,000 $240,000

Direct labor hours 2,000 1,500 2,000 3,000

Number of square feet 800 1,200 2,400 2,600

The company allocates services department costs using the sequential method. First, S1 costs are allocated on the basis of direct labor hours. Next S2 costs are allocated on the basis of square footage. The square footage for S1 is assumed to be zero for this purpose.

Determine the total support cost allocated to each of the two production departments.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M923975

Have any Question? 


Related Questions in Business Economics

What would happen if there were decreases in both supply

What would happen if there were decreases in both supply and demand for some good such as a new tractor? 1. If the decrease in supply is greater than the decrease in demand, equilibrium price will fall. 2. If the decreas ...

Suppose that there is asymmetric information in the market

Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are ?selling but buyers do not. Buyers know that there is a 5050?% chance of getting a? "lemon", a l ...

You are an assistant to a senator who chairs an ad hoc

You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreov ...

Starting with a positive output gap where aggregate demand

Starting with a positive output gap where aggregate demand is at a level less than full employment, assume that the annual Real GDP growth rate is equal to 2.5% and the annual supply side growth rate is equal to 2.5%. As ...

Using what you have researched and studied throughout

Using what you have researched and studied throughout Modules 1 - 7, write a report addressing a quantitative analysis (QA) project. Here, you are asked to select a business of interest and develop QA best practices that ...

You work for a nonprofit organization that promotes

You work for a nonprofit organization that promotes after-school tutoring for middle school children, and your coworker has asked you to help him determine the equation for the supply of tutoring in a particular neighbor ...

Draw a production possibilities frontiers to represent each

Draw a Production Possibilities Frontier(s) to represent each of the following situations. The goods in question are ice skates and downhill skis. An increase in the population provides more labor for the production of b ...

Assignmentselect a business situation such as

Assignment Select a business situation such as reorganization, office closure, expansion, etc. Locate 1-2 articles each from the University Library about the subject. Prepare a 700-word discussion of the business situati ...

A hospital in a town has one dialysis machine that can run

A hospital in a town has one dialysis machine that can run for 30 hours per week. As the boss of the hospital, you must decide who gets the treatment.   There are a number of patients who require treatment and their need ...

Jones manufacturing company makes two products the

Jones Manufacturing Company makes two products. The company’s budget includes $486,680 of overhead. In the past, the company allocated overhead based on estimated total direct labor hours of 21,160. Jones recently implem ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate