Month Overhead Cost of labor hours Page 4 of 12 January 9640 490 February 12680

# Month overhead cost of labor hours page 4 of 12

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Month Overhead Cost # of labor hours Page 4 of 12
January \$ 9,640 490 February \$ 12,680 680 March \$ 11,080 580 April \$ 11,720 620 May \$ 13,000 700 June \$ 10,120 520 July \$ 8,840 440 August \$ 6,600 300 Required: Using the high-low method: A) Calculate the fixed cost of overhead. B) Calculate the variable rate per labor hour. C) Construct the cost formula for total overhead cost. 3.D) The company is estimating that in September the labor hours will be 600. Howmuch should they estimate to have in total overhead cost for September? 4. Total cost = \$11,400 3. Aaron Company provided the following data for next month: Selling price per unit \$400 Total Variable costs \$288,000 Total fixed costs per unit \$216,000 Expected (planned) production and sales 1,800 units Page 5 of 12
Required: What is contribution margin per unit? What is the break-even point in units? ANS Variable cost per unit = \$288000/1800 = \$160. Contribution margin per unit = 400 – 160 = \$240. Break-even points in units = \$216,000/\$240 per unit = 900 units 4. The packaging department had the following data for the month of June: Units in BWIP 0 Units completed 8,000 Units in EWIP (25% complete) 1,200 Total manufacturing costs 14,525 Required: A. What is the output in equivalent units for June? B. What is the unit manufacturing cost for June? C. Calculate the cost of goods transferred out for June. D. Calculate the value of June's EWIP ANS: A. Units completed 8,000 1,200 units x 25% complete 300 June output 8,300 B. Unit cost = \$14,525/8,300 = \$1.75 C. Cost transferred out = \$1.75 x 8,000 = \$14,000 D. EWIP = \$1.75 x 300 = \$525 5. Pribil Farm Equipment is a job-order costing manufacturer that uses a plantwide overhead rate based on direct labor hours. Estimations for the year include \$336,000 in overhead and 28,000 direct labor hours. Pribil worked on five jobs in June. Data are as follows: Job 89 Job 90 Job 91 Job 92 Job 93 Page 6 of 12
Balance, 6/1 \$23,110 \$18,240 \$ 9,510 \$ 0 \$ 0 Direct materials 13,000 17,210 22,900 15,240 8,210 Direct labor cost \$8,075 \$11,500 \$16,250 \$9,750 \$4,860 Direct labor hours 1,615 2,300 3,250 1,950 972 By June 30, Jobs 89 and 91 were completed and sold. The rest of the jobs remained in process. A. Calculate the plantwide overhead rate. B. Prepare a job-order cost sheet. C. Calculate the Work in Process on June 30. D. Calculate the cost of goods sold for June. ANS: A. \$336,000/28,000 = \$12 per direct labor hour B. Job-order Cost sheet Job 89 Job 90 Job 91 Job 92 Job 93 Balance, 6/1 \$23,110 \$18,240 \$ 9,510 \$ 0 \$ 0 Direct materials \$13,000 \$17,210 \$22,900 \$15,240 \$8,210 Direct labor cost \$8,075 \$11,500 \$16,250 \$9,750 \$4,860 Applied overhead \$19,380 \$27,600 \$39,000 \$23,400 \$11,664 Balance 6/30 \$63,565 \$74,550 \$87,660 \$48,390 \$24,734 C. \$74,550 + \$48,390 + \$24,734 = \$147,674 Job 90 Job 92 Job 93 Balance, 3/1 \$18,240 \$0 \$0 Direct materials 17,210 15,240 8,210 Direct labor cost 11,500 9,750 4,860 Overhead 27,600 23,400 11,664 Total \$74,550 \$48,390 \$24,734 D. Job 89: \$23,110 + \$13,000 + \$8,075 + \$19,380 = \$63,565 Job 91: \$9,510 + \$22,900 + \$16,250 + \$39,000 = \$87,660 6. Round Rock Company manufactures a product in a factory that has two producing departments, Cutting and Stitching, and two support departments, S1 and S2. The activity driver for S1 is number of employees, and the activity driver for S2 is number of machine hours. The following data pertain to Round Rock: Page 7 of 12
Support Departments Producing Departments S1 S2 Cutting Stitching Direct costs \$210,000 \$165,000 \$125,000 \$75,500 Normal activity: Number of employees - 50 75 175 Machine hours 700 - 11,250 3,750 Required: A. Calculate the cost assignment ratios to be used under the direct method for

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