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97.
Job order cost system
Century Pools designs and builds custom pools and spas to the customer's order and uses
a job order system. The predetermined overhead rate for the current year is 60% of direct
labor cost.
At the end of the current year, Century Pools' direct labor cost totaled $170,000 and actual
overhead amounted to $105,000.
A pool built for F. Becker required $32,000 of direct materials and $6,500 of direct labor. It
was completed in May of the current year.
(a) Compute the total cost of the Becker pool as shown on the job cost sheet at date of
completion.
(b) Compute the amount of under- or over-applied manufacturing overhead for Century's
operations for the current year.
(c) What disposition is made of over- or under-applied overhead at the end of the year
(assume that the amount is not material)?
98.
Under- and over-applied overhead
What is meant by under-applied overhead? By over-applied overhead? Briefly explain each
term.
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99.
Job order cost system
Continental Company uses a job order cost accounting system. During March, three jobs
were completed and the costs were computed as follows: job no. 1, $89,000; job no. 2,
$58,800; job no. 3, $54,000. As of March 31, the following amounts had been charged to the
Work in Process Inventory controlling account in the general ledger:
(a) Prepare the general journal entry to reflect the jobs completed during March:
(b) Compute the cost of the unfinished jobs at March 31. $__________
100.
Alice Blue is a wholesale dress manufacturer. In manufacturing dresses, the following
costs were incurred in March:
Projected overhead for the year was $560,000 to be allocated based on project direct labor
cost of $395,000. What are the total manufacturing costs for March (round your answers)?
101.
Selecting an activity base
Listed below are six activity cost pools used by the Keaton Corporation:
Listed below are six activity bases used by Keaton to allocate manufacturing overhead
costs to products. In the space provided next to each activity base, indicate for which of the
above cost pools it is a cost driver.
_____ (a) Number of equipment work orders related to each product line.
_____ (b) Number of direct material purchase orders related to each product line.
_____ (c) Number of production runs related to each product line.
_____ (d) Square feet of direct materials warehouse space occupied by each product line.
_____ (e) Number of machine hours required to produce each product line.
_____ (f) Square feet of production space occupied by each product line.
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102.
Allocating activity cost pools to products
Burgandy Corporation makes plastic and wooden picture frames. The company has
assigned $107,000 in monthly manufacturing overhead costs to two cost pools as follows:
$67,000 to power costs, and $40,000 to production set-up costs. Additional monthly data
are provided below:
Power costs are allocated to products using machine hours as an activity base. Set-up
costs are allocated to products based on the number of production runs each product line
requires.
(a) Allocate manufacturing overhead from the activity cost pools to each product line.
(b) Compare the total per-unit cost of manufacturing plastic frames and wooden frames.
(c) On a per-unit basis, which product line appears to be most profitable?
Feedback:
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103.
Allocating activity cost pools to products
Laughton Corporation makes two styles of cases for compact disks, the standard case and
the deluxe case. The company has assigned $210,000 in monthly manufacturing overhead
to three cost pools as follows: $90,000 to machining costs, $60,000 to production set-up
costs, and $60,000 to inspection costs.
Additional monthly data are provided below:
The first and last unit in each production run is inspected for quality control purposes.
Inspection costs are allocated to the products based on the number of inspections
required. Machining costs are allocated to products using machine hours as an activity
base. Set-up costs are allocated to products based on the number of production runs each
product line requires.
(a) Allocate manufacturing overhead from the activity cost pools to each product line.
(b) Compare the total per-unit cost of manufacturing standard cases and deluxe cases.
(c) On a per-unit basis, which product appears to be more profitable?
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