Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has...
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Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute the direct-cost rate and the indirect-cost rate per Web-designing labor-hour for 2020 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Begin by identifying the formula to calculate the actual indirect-cost rate. Actual indirect-costs Actual direct labor-hours Identify the formula to calculate the budgeted indirect-cost rate. Budgeted indirect-costs Budgeted direct labor-hours = Actual indirect-cost rate Budgeted indirect-cost rate Data table Budget for 2020: Direct labor costs Direct labor-hours Overhead costs Actual results for 2020: Direct labor costs Direct labor-hours Overhead costs Print $ 280,000 10,000 180,000 $ $ $ Done 260,000 10,000 200,000 I X Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Budgeted direct-costs Budgeted direct labor-hours Compute the direct-cost rate and the indirect-cost rate per labor hour under: (b) Normal costing Direct-cost rate Indirect-cost rate (a) Actual costing 26 20 (c) Variation of normal costing Budgeted direct-cost rate Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Requirement 2. Which method would you suggest Crant Solutions use? Explain. Craft Solutions should choose a job-costing system based on the direct cost information available to them. If Craft Solutions knows direct costs as the jobs are being done, I would recommend Craft Solutions use normal costing over actual costing by calculating a budgeted indirect cost rate to cost jobs. Normal costing enables Craft Solutions to use the budgeted indirect cost rate calculated at the beginning of the year to estimate the cost of a job as soon as the job is completed. If Craft Solutions does not know direct costs as the jobs are being completed, I would recommend that Craft Solutions use the variation of normal costing that calculates a budgeted direct cost rate. This would allow Craft Solutions to estimate costs on a more-timely hanin Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Requirement 3. Craft Solutions' Web design for Greenville Day School was budgeted to take 95 direct labor-hours. The actual time spent on the project was 80 hours. Compute the cost of the Greenville Day School job using (a) actual costing. (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Begin by identifying the formulas to calculate the direct and indirect-costs under actual costing. (a) Actual costing: Direct-costs Indirect-costs Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) (b) Normal costing: Direct-costs Indirect-costs Identify the formulas to calculate the direct and indirect-costs under the variation of normal costing. (c) Variation of normal costing: Direct-costs Indirect-costs = Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) What would the cost of this job be under each of the costing methods in requirement 1? (b) (c) Normal Variation of costing normal costing Cost of Craft Solutions: Direct-costs Indirect-costs Total job costs (a) Actual costing Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute the direct-cost rate and the indirect-cost rate per Web-designing labor-hour for 2020 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Begin by identifying the formula to calculate the actual indirect-cost rate. Actual indirect-costs Actual direct labor-hours Identify the formula to calculate the budgeted indirect-cost rate. Budgeted indirect-costs Budgeted direct labor-hours = Actual indirect-cost rate Budgeted indirect-cost rate Data table Budget for 2020: Direct labor costs Direct labor-hours Overhead costs Actual results for 2020: Direct labor costs Direct labor-hours Overhead costs Print $ 280,000 10,000 180,000 $ $ $ Done 260,000 10,000 200,000 I X Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Budgeted direct-costs Budgeted direct labor-hours Compute the direct-cost rate and the indirect-cost rate per labor hour under: (b) Normal costing Direct-cost rate Indirect-cost rate (a) Actual costing 26 20 (c) Variation of normal costing Budgeted direct-cost rate Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Requirement 2. Which method would you suggest Crant Solutions use? Explain. Craft Solutions should choose a job-costing system based on the direct cost information available to them. If Craft Solutions knows direct costs as the jobs are being done, I would recommend Craft Solutions use normal costing over actual costing by calculating a budgeted indirect cost rate to cost jobs. Normal costing enables Craft Solutions to use the budgeted indirect cost rate calculated at the beginning of the year to estimate the cost of a job as soon as the job is completed. If Craft Solutions does not know direct costs as the jobs are being completed, I would recommend that Craft Solutions use the variation of normal costing that calculates a budgeted direct cost rate. This would allow Craft Solutions to estimate costs on a more-timely hanin Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) Requirement 3. Craft Solutions' Web design for Greenville Day School was budgeted to take 95 direct labor-hours. The actual time spent on the project was 80 hours. Compute the cost of the Greenville Day School job using (a) actual costing. (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Begin by identifying the formulas to calculate the direct and indirect-costs under actual costing. (a) Actual costing: Direct-costs Indirect-costs Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) (b) Normal costing: Direct-costs Indirect-costs Identify the formulas to calculate the direct and indirect-costs under the variation of normal costing. (c) Variation of normal costing: Direct-costs Indirect-costs = Craft Solutions designs Web pages for clients in the education sector. The company's job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool composed of all overhead costs. Overhead costs are allocated to individual jobs based on direct labor-hours. The company employs six Web designers. Budgeted and actual information regarding Craft Solutions follows: (Click the icon to view the data.) What would the cost of this job be under each of the costing methods in requirement 1? (b) (c) Normal Variation of costing normal costing Cost of Craft Solutions: Direct-costs Indirect-costs Total job costs (a) Actual costing
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Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
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