Accounting Exercises
ACC/561 Exercise 15-5,16-1, 17-1 ;
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1. ;Exercise 15-5
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Dugan Company applies manufacturing overhead to jobs on the basis of machine hours used. ;Overhead costs are expected to total $339,300 for the year, and machine usage is estimated at 125,700 hours.
For the year, $358,964 of overhead costs are incurred and 131,100 hours are used.
a) ;Compute the Manufacturing Overhead rate per machine hour
b) ;What is the amount of Overhead under-applied?
c) ;Prepare an adjusting entry to assign the under or over applied overhead for the year to ;Cost of Goods Sold.
2. ;Exercise 16-3
The ledger of Custer Company has the following work in process account.
;Work in Process—Painting
5/1 Balance ;4,790 ;5/31 Transferred out?
5/31 Materials ;7,200
5/31 Labor ;3,370 ;
5/31 Overhead ;1,840
5/31 Balance ;?
Production record shows that there were 580 units in the beginning inventory, 30% complete, 1,600 units started, and 1530 units transferred out. ;The beginning work in process had materials cost of $3,140 and conversion costs of $1,650. ;The units in ending inventory were 40% complete. ;Materials are entered at the beginning of the painting process.
a) ;How many units are in process at May 31?
b) ;What is the material cost for May?
c) ;What is the unit conversion cost for May?
d) ;What is the Total cost of units transferred out in May?
e) ;What is the cost of the May 31 inventory/Work in Process?
3. ;Exercise 17-1
Wilkins Inc. has two types of handbags: ;standard and custom. ;The controller has decided to use a plantwide overhead rate based on direct labor costs. ;The president has heard of activity-based costing and wants to see how the results would differ if this system were used. ;Two activity cost pools were developed: ;machining and machine set-up. ;Presented below is information related to the company’s operations.
;Standard ;Custom ;
Direct labor costs ;$45,000 ;$97,500
Machine hours ;1,430 ;1,350
Setup hours ;98 ;390
Total estimated overhead cost are $307,700. ;Overhead cost allocated to the machining activity cost pool is $196,600, and $111,100 is allocated to the machine setup pool.
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Compute the overhead rate using the traditional (Plantwide) approach? ;(Round answers to 2 decimal places, e.g. 12.25)
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Predetermined overhead rate % of Direct Labor cost?
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Overhead allocated to Machining activity cost pool?
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Compute the Overhead rates using the activity-based costing approach. ;(Round answers to 2 decimals places, e.g. $12.25.)
Machining —————? ;Setup—————-?
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Determine the difference in allocation between the two approaches:
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Traditional costing: ;Standard:————–? ;Custom:—————?
Activity-based-costing: ;Standard: ————–? ;Custom:—————-?