ABC company has made some major accounting changes. The controller has decided to combine direct labor...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ABC company has made some major accounting changes. The controller has decided to combine direct labor cost with overhead. The company has created two manufacturing cells, each capable of producing radiator cell and water pump cell. The output of both cells is sold to a division within the corporation. Product-level overhead costs outside the cells are assigned to each cell using appropriate drivers. Facility-level costs are allocated to each cell on basis of square footage. The budgeted direct labor and overhead costs are as follows: Direct labor costs Direct overhead Product sustaining Facility level Total conversion cost Water Pump Radiator Cell Cell $ 190,000 $ 110,000 720,000 360,000 269,990 107,800 180,000 90,000 $ 1,359,990 $ 667,800 The predetermined conversion cost rate is based on available production hours in each cell. The radiator cell has 40,500 hours available for production The water pump cell has 22.500 hours available for production Conversion costs are applied to units produced by multiplying the conversion rate by the actual time required to produce the units All units produced are sold. Any conversion cost variance is closed to Cost of Goods Sold. Other actual results for the year are as follows: Direct materials purchased and issued Direct labor costs Overhead 81,000 units produced 90,000 units produced $1,500,000 300,000 1,890,000 0.5 hour to produce one unit 0.25 hour to produce one unit Required: You will be graded on the accuracy of your answer along with using proper account titles. 1. Calculate the predetermined conversion cost rates for the Radiator cell and the Water Pump cell. Use cell referencing to calculate your rates 2. Prepare all the journal entries using the backflush accounting. Assume two trigger points (1) the purchase of raw materials and (2) the completion of goods as the second trigger point. 3. Redo all the journal entries using the backflush accounting, but assume the second trigger point is the sales of goods. 4. Redo all the journal entries using the backflush accounting, but assume there is one trigger point and that trigger point is sales of goods. 5. Explain why a company would use the backflush approach in #4 where there is only one trigger point. Solution: Provide your solution below. Make sure you use cell referencing and proper account titles for all journal entries. ABC company has made some major accounting changes. The controller has decided to combine direct labor cost with overhead. The company has created two manufacturing cells, each capable of producing radiator cell and water pump cell. The output of both cells is sold to a division within the corporation. Product-level overhead costs outside the cells are assigned to each cell using appropriate drivers. Facility-level costs are allocated to each cell on basis of square footage. The budgeted direct labor and overhead costs are as follows: Direct labor costs Direct overhead Product sustaining Facility level Total conversion cost Water Pump Radiator Cell Cell $ 190,000 $ 110,000 720,000 360,000 269,990 107,800 180,000 90,000 $ 1,359,990 $ 667,800 The predetermined conversion cost rate is based on available production hours in each cell. The radiator cell has 40,500 hours available for production The water pump cell has 22.500 hours available for production Conversion costs are applied to units produced by multiplying the conversion rate by the actual time required to produce the units All units produced are sold. Any conversion cost variance is closed to Cost of Goods Sold. Other actual results for the year are as follows: Direct materials purchased and issued Direct labor costs Overhead 81,000 units produced 90,000 units produced $1,500,000 300,000 1,890,000 0.5 hour to produce one unit 0.25 hour to produce one unit Required: You will be graded on the accuracy of your answer along with using proper account titles. 1. Calculate the predetermined conversion cost rates for the Radiator cell and the Water Pump cell. Use cell referencing to calculate your rates 2. Prepare all the journal entries using the backflush accounting. Assume two trigger points (1) the purchase of raw materials and (2) the completion of goods as the second trigger point. 3. Redo all the journal entries using the backflush accounting, but assume the second trigger point is the sales of goods. 4. Redo all the journal entries using the backflush accounting, but assume there is one trigger point and that trigger point is sales of goods. 5. Explain why a company would use the backflush approach in #4 where there is only one trigger point. Solution: Provide your solution below. Make sure you use cell referencing and proper account titles for all journal entries.
Expert Answer:
Answer rating: 100% (QA)
1 Predetermined Conversion Cost Rates Radiator Cell Predetermined Conversion Cost Rate Total Conversion Cost Available Production Hours 667800 40500 hours 1647 per hour Water Pump Cell Predetermined C... View the full answer
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
Posted Date:
Students also viewed these accounting questions
-
A manufacturing company has two plants, each capable of producing smartphones, tablets, and Bluetooth headphones. The daily production capacities of each plant are as follows. Plant I Plant II...
-
Problem 23-7A Your answer is partially correct. Try again. Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials-3 pound plastic at...
-
A company's budgeted overhead (applied using direct labor hours) totaled $235,000 and its actual overhead totaled $230,300. If its budgeted direct labor hours totaled 5,000, and its actual direct...
-
Consider Southeast Home Care, which is a for-profit business. In 2020, its net income was $1,500,000 and it distributed $500,000 to owners in the form of dividends. Its beginning-of-year equity...
-
Find the mesh currents in the circuit of Fig. 3.98 using MATLAB. Figure 3.98 For Prob. 3.53 Is WA I3 3 mA 1 k2 4 k2 12 V
-
Mayr et al. (1994) took an SRS of 240 children who visited their pediatric outpatient clinic. They found the following frequency distribution for the age (in months) of free (unassisted) walking...
-
This is actually a paired data situation (since each person was measured before and after eating organic), so we create a new variable, the differences in pesticide concentration, by taking pesticide...
-
Laura Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $130,000 and will increase annual expenses by $80,000 including...
-
a. In the opening vignette, Chris Venter discusses the importance of being able to provide good solutions for his partners in a team environment. In particular, for larger purchases and key...
-
Consider the operations of a fast-food restaurant serving pre-made pasta dishes to its guests. The operation consists of four steps. Each customer is first greeted and offered a menu and a tray,...
-
In the compound [Ag(NH 3 ) 2 ]Cl, what is theligand? ?Ag, Cl, NH3or [Ag(NH 3 ) 2 ] + ? Write the electronic configuration of an Fe atom. Write the electronic configuration of an Fe 3+ atom. Can you...
-
Outline a procedure for graphing a line using the slope-intercept method.
-
a. Elaine is twenty years old, and Philip, a bachelor, is seventy-five. Philip asks Elaine to marry him. Philip has terminal cancer and wants to die a married man. He and Elaine know that he probably...
-
Examine the following sequence of events: Ann and Rich meet in State Y where they agree to live together as husband and wife forever. They do not want to go through a marriage ceremony, but they...
-
For the following questions, examine the statutory code of your state. a. Has a dower been abolished in your state? If so, give the citation to the statute that abolished it. b. If a widow is not...
-
In your state, can one spouse use wiretap evidence against the other spouse at the divorce hearing (e.g., the wife taps her husbands phone and wants to introduce into evidence the conversation he had...
-
Alex is a member of Acme Ltd, a public company listed on the ASX. Acme Ltd's constitution provides that each ordinary shareholder is to be given a copy of all proposed resolutions (both ordinary and...
-
7 A 29-year-old, previously healthy man suddenly collapses at a party where legal and illicit drugs are being used. Enroute to the hospital, he requires resuscitation with defibrillation to establish...
-
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $80.50 per helmet, and fixed costs are $1,255,800. The tax rate is...
-
Using the same data found in Exercise 6.22, assume the company uses the FIFO method. Required: Prepare a schedule of equivalent units, and compute the unit cost for the month of December. In Exercise...
-
Jason Rogers works full-time for UPS and runs a lawn-mowing service part-time after work during the warm months of April through October. Jason has three men working with him, each of whom is paid $6...
-
Verify the log-likelihood in equation (16.4) for the Tobit model. In L = = In { 1-0 (x-di)} 1:y=di 122. + (y; - x) 02 (16.4) i:y;>di
-
Derive the likelihood for the tobit type II model. Show that your likelihood reduces to equation (16.5) in the case of uncorrelated disturbance terms. n2. (16.5) -(-)-(-2)/02 L = [] {(p;)" (1 p;...
-
The product-as-a-service business model can generate large profits. Instead of producing and selling a product, the producer is responsible for the product for its entire life. The customer uses the...
Study smarter with the SolutionInn App