+1-415-315-9853

info@mywordsolution.com

## Accounting

 Accounting Basics Cost Accounting Financial Accounting Managerial Accounting Auditing Taxation

Q1) Two companies which have been competitors for many years newly decided to quit fighting each other and merge into one company. Companies were siyuated next to each other and shared common wall for plant space. In the effort to promote goodwill and to raise transparency between companies, the recently merged enterprise knocked down common wall which once separated them. Top management agreed that control of operations would be equally shared and that original plant managers would continue to operate similarly to how they had in past, except now as one company with two divisions (A and B) and two division managers.

Companies (now divisions) each made same product and produced at the same rate. Only apparent difference was that Division A was more labor-intensive, by using many workers with simple tools to get their production, where as more capital-intensive Division B used automated machines and fewer workers to get production. Otherwise, their respective product outputs were same. Both companies manufactured at the rate of 1,000 units per year.  Division A assigned overhead based on direct labor hours (DLH) where as Division B allocated overhead based on machine hours (MH).

Cost data for most recent year reflected same actual amount of overhead resource usage per DLH (\$25) and per MH (\$40) between divisions, but divisions incurred slightly different total overhead costs per unit of product because of emphasis on labor in A and machines in B. Because of this, actual cost of overhead was given below:

 Division A Division B DLH = 5 per product unit @ \$25 = \$125 per unit DLH = 2 per product unit @ \$25 = \$50 per unit MH = 2 per product unit @ \$40 = \$80 per unit MH = 4 per product unit @ \$40 = \$160 per unit Total actual overhead cost per unit = \$205 Total actual overhead cost per unit = \$210 Total actual overhead cost incurred = \$205,000 Total actual overhead cost incurred = \$210,000

Other costs comprise direct material (DM) of \$100 per product unit for both divisions and direct labor of \$50 per product unit for Division A and \$20 per product unit for Division B reflecting wage rate of \$10 per direct labor hour (DLH).

After merger operations manager of each division decided it would be much simpler to assign costs by using one plant wide rate as they did before merger. Machine hours are selected as basis for allocation as this is what Division B used. This decision was based on fact that Division B seems more efficient, given Division B\'s lower total cost per unit.  Moreover, top management reasons that Division B appears to be the more modern and progressive of two companies given their degree of automation. They also think allocation based on MH more accurately reflects trend of operations in future.

Top management complains that if accountants had been more correct in evaluating overhead then they wouldn't have over applied overhead. Is this true? Describe.

Accounting Basics, Accounting

• Category:- Accounting Basics
• Reference No.:- M918730

Have any Question?

## Related Questions in Accounting Basics

1. A title page (replace this page with your title page), proper grammar and a reference list. 2. A 2-3 page summary of the article - here's a suggested method for writing the summary: a. Read the article and make sure y ...

### Selected t-accounts of moore company are given below for

Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Manufacturing Overhead ________________________________________ Bal. 1/1 29,800 ________________________________________ Cre ...

### Accountingcase to assess assurance of learning goal ethical

Accounting Case to assess Assurance of Learning Goal (Ethical Perspectives) Michael Greer is the Marketing Vice President for Atlantic Lubricants headquartered in Boston with extensive operations in New York City that se ...

### Accounting for nonfinancial assets will experience some

Accounting for nonfinancial assets will experience some major changes with the convergence to IFRS. One of the key issues will be that of fair value. Research this topic, and give your argument for or against the use of ...

### Assignemntselect a research issue problem or opportunity

Assignemnt Select a research issue, problem, or opportunity that could benefit from hypothesis testing. It may be an issue related to your work or it may a more global type of problem. Develop a research hypothesis that ...

### Assignmentpigskin must decides how many footballs to

Assignment Pigskin must decides how many footballs to produce each month for 6-month planning horizon. Monthly demand must be satified on time. Set a model to determine the production plan for next 6 months which incurs ...

### Assignmentsongo dealers sells clothing and began trading

Assignment SONGO DEALERS sells clothing and began trading operations on 1 April 20X3. All amounts are paid by cheque, unless otherwise stated. The entity uses the perpetual inventory system and maintains a gross profit p ...

### Flint hills companys most recent financial statements

Flint Hills Company's most recent financial statements showed dismal performance. There was a net loss of \$10,000 and the Statement of Cash Flows showed a net cash decrease in all categories. The company president called ...

### Reading concept summaryno plagiarism must be original

Reading Concept Summary **NO PLAGIARISM. MUST BE ORIGINAL. PLEASE USE REFERENCES IF NEEDED ** Write a 260- to 350-word summary of this week's readings. Please write about the following: Fixed Assets, Depreciation, and In ...

### Data for the year-end adjustments for al geromes courier

Data for the year-end adjustments for Al Gerome's Courier Services are as follows: Insurance expired during the year (\$950.00) Depreciation of Equipment for the year (\$9,860.00) Salaries accrued at December 31 (\$5100.00) ...

• 13,132 Experts

## 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.

### WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

### Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

### Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

### Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

### Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro