1) XYZ CORP HAS THE FOLLOWING DATA:
BUDGETED OVERHEAD $156,000
BUDGETED MACHINE HOURS (DRIVER) 40,000 PDOHR = 3.9
ACTUAL MACHINE HOURS:
JOB 17 10,500 COGS
JOB 18 6,300 FG
JOB 19 16,800 FG
JOB 20 8,400 WIP
42,000
JOBS 17, 18 & 19 WERE FINISHED. JOB 17 WAS SOLD. TOTAL ACTUAL OVERHEAD = $162,800. WHAT IS ACTUAL OVERHEAD IN FINISHED GOODS AFTER ADJUSTING FOR ANY OVER OR UNDER APPLIED OVERHEAD? (ASSUME OVERHEAD VARIANCE ALLOCATED AMONG WIP, FG AND COGS) (4 POINTS)
ACTUAL OVERHEAD FG 89,540 6,300 + 16,800
42,000 X 162,800
2) SMITH CORP PURCHASED $63,000 OF RM DURING THE CURRENT
ACCOUNTING PERIOD. SMITH INCURRED $90,000 OF DL AND $67,000 OF MFG
OVERHEAD. ASSUME COMBINED INVENTORY FOR RM, WIP AND FG INCREASED
BY $5,800. WHAT IS COGS? (4 POINTS)
COGS 214,200
63,000 + 90,000 + 67,000 – 5,800
3) JOHNSON HAS THE FOLLOWING INFORMATION FOR THE LAST 4 MONTHS:
MONTH UNITS TOTAL COSTS
MAY 7,870 $581,510
JUNE 7,850 $581,750 LOW UNITS
JULY 8,240 $606,940
AUG 8,320 $607,600 HIGH UNITS
USING THE HIGH/LOW METHOD, ESTIMATE TOTAL COSTS AT 9,500 UNITS. (4 POINTS)
ESTIMATED TOTAL COSTS 672,500
607,600 – 581,750
8,320 – 7,850 VC/ = 55
55 X 7,850 + 150,000 = 581,750 ALSO 55 X 8,320 + 150,000 = 607,600
55 X 9,500 + 150,000 = 672,500
4) VAL CORP HAS TOTAL APPLIED OVERHEAD = $81,400. JOB 9 USED 7,700 MACHINE
HOURS. TOTAL MACHINE HOURS = 22,000. ASSUME JOB 9 IS THE ONLY JOB REMAINING IN WIP AT THE END OF THE ACCOUNTING PERIOD. WHAT IS APPLIED OVERHEAD IN WIP? (4 POINTS)
APPLIED OVERHEAD IN WIP 28,490
81,400/22,000 X 7,700 = 28,490
7,700/22,000 X 81,400 = 28,490
NOTE: PDOHR = 3.7
5) SMITH ALLOCATED ADDITIONAL OVERHEAD TO PRODUCT X = $84,320 AFTER SWITCHING TO ABC. PREVIOUSLY OVERHEAD WAS ALLOCATED USING ONLY DIRECT LABOR HOURS. UNDER ABC OVERHEAD IS NOW ALLOCATED USING BOTH DIRECT LABOR HOURS AND MACHINE HOURS. PRODUCT X USES 76 PERCENT OF MACHINE TIME. $248,000 HAS BEEN ASSIGNED TO THE MACHINE POOL. WHAT IS PRODUCT X’S DIRECT LABOR PERCENTAGE? (4 POINTS)
DIRECT LABOR PERCENTAGE 42%
(.76 – .42) 248,000 = 84,320
6) GRACE SAVED $73,200 WHEN OUTSOURCING 9,200 UNITS. GRACE SAVED $49,200
WHEN SHE OUTSOURCED 11,200 UNITS. AT WHAT UNIT LEVEL WILL INSIDE AND OUTSIDE PRODUCTION COSTS BE THE SAME? (4 POINTS)
BREAK EVEN UNITS 15,300
UNITS SAVINGS
9,200 73,200
11,200 49,200
2,000 24,000
24,000/2,000 = $12 (EXCESS OF OUTSIDE VC/ OVER INSIDE VC/)
9,200 + 73,200/12 = 15,300
11,200 + 49,200/12 = 15,300
7) REX HAS THE FOLLOWING COST DATA:
UNITS = 18,000
VC/UNIT = $11
FC/UNIT = $25
FIXED COST INCREASE 30 PERCENT AT 19,000 UNITS. WHAT IS TOTAL COST/UNIT AT 25,000 UNITS? (DON’T ROUND) (4 POINTS)
TOTAL COST/UNIT 34.4
VC/UNIT 11
FC/UNIT 23.4 (25 X 18,000)1.3
34.4 25,000
NOTE: TOTAL FC ABOVE 19,000 UNITS = 585,000
8) REFER TO QUESTION 7. WHAT ARE TOTAL COSTS AT 27,500 UNITS? (2 POINTS)
TOTAL COSTS 887,500
11 X 27,500 + 585,000 = 887,500
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