After some discussion with the furniture plant controller, Gisela decided to use machine hours to calculate...

   

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After some discussion with the furniture plant controller, Gisela decided to use machine hours to calculate the overhead rate for the Cutting Department and direct labor hours for the Assembly Department rate (the Cutting Department was more automated than the Assembly Department). As part of her report, she wanted to compare the effects of plantwide rates and departmental rates on the cost of jobs. She wanted to know if overhead costing could be the source of the pricing problems the company was experiencing. To assess the effect of the different overhead assignment procedures, Gisela decided to examine two prospective jobs. One job, Job A500, could produce 500 sofas, using a frequently requested style and Fabric FB70. Bids on this type of job were being lost more frequently to competitors. The second job, Job B75, would produce 75 specially designed recliners. This job involved a new design and was more difficult for the workers to build. It involved some special cutting requirements and an unfamiliar assembly. Recently, the company seemed to be winning more bids on jobs of this type. To compute the costs of the two jobs, Gisela assembled the following information on the two jobs: Job A500: Direct materials: Fabric FB70 Lumber (No. 1 common) Other components Direct labor: Cutting Department Assembly Department Machine time: Cutting Department Assembly Department Job B75: Direct materials: Fabric FB70 Lumber (first and seconds) Other components Direct labor: Cutting Department Assembly Department Machine time: Cutting Department Assembly Department 180 bolts @ $350 20,000 board feet @ $0.12 $26,600 400 hours @ $10 1,600 hours @ $8.75 350 machine hours 50 machine hours 26 yards @ $350 2,200 board feet @ $0.12 $3,236 70 hours $10 240 hours @ $8.75 90 machine hours 15 machine hours Departmental data (budgeted): Overhead Machine hours Receiving orders Square feet Direct labor hours Furniture Plant: Service Departments General Power Maintenance Factory Cutting Assembly Producing Departments Receiving $450,000 $500,000 $300,000 $525,000 $750,000 60,000 13,500 15,000 50,000 1,000 5,000 4,000 $375,000 15,000 9,000 10,000 200,000 2. Calculate the plantwide overhead rate for the fabric plant. $ per hour Calculate the amount of under- or overapplied overhead for the fabric plant. 3. a. Using the weighted average method, complete the following information regarding the Weaving and Pattern production process: 1. Physical flow schedule (measured in yards) ii. Materials Conversion Costs iii. Unit cost iv. Cost of goods transferred out b. To convert the output of the Weaving and Pattern Department to the output of the Coloring and Bolting Department, yards transferred is by c. Using the weighted average method, complete the following for the Coloring and Bolting Department: 1. Physical flow schedule (measured in bolts) ii. Equivalent units schedule (measured in bolts) iii. Unit cost $ Transferred-in Materials Materials Conversion Costs After some discussion with the furniture plant controller, Gisela decided to use machine hours to calculate the overhead rate for the Cutting Department and direct labor hours for the Assembly Department rate (the Cutting Department was more automated than the Assembly Department). As part of her report, she wanted to compare the effects of plantwide rates and departmental rates on the cost of jobs. She wanted to know if overhead costing could be the source of the pricing problems the company was experiencing. To assess the effect of the different overhead assignment procedures, Gisela decided to examine two prospective jobs. One job, Job A500, could produce 500 sofas, using a frequently requested style and Fabric FB70. Bids on this type of job were being lost more frequently to competitors. The second job, Job B75, would produce 75 specially designed recliners. This job involved a new design and was more difficult for the workers to build. It involved some special cutting requirements and an unfamiliar assembly. Recently, the company seemed to be winning more bids on jobs of this type. To compute the costs of the two jobs, Gisela assembled the following information on the two jobs: Job A500: Direct materials: Fabric FB70 Lumber (No. 1 common) Other components Direct labor: Cutting Department Assembly Department Machine time: Cutting Department Assembly Department Job B75: Direct materials: Fabric FB70 Lumber (first and seconds) Other components Direct labor: Cutting Department Assembly Department Machine time: Cutting Department Assembly Department 180 bolts @ $350 20,000 board feet @ $0.12 $26,600 400 hours @ $10 1,600 hours @ $8.75 350 machine hours 50 machine hours 26 yards @ $350 2,200 board feet @ $0.12 $3,236 70 hours $10 240 hours @ $8.75 90 machine hours 15 machine hours Departmental data (budgeted): Overhead Machine hours Receiving orders Square feet Direct labor hours Furniture Plant: Service Departments General Power Maintenance Factory Cutting Assembly Producing Departments Receiving $450,000 $500,000 $300,000 $525,000 $750,000 60,000 13,500 15,000 50,000 1,000 5,000 4,000 $375,000 15,000 9,000 10,000 200,000 2. Calculate the plantwide overhead rate for the fabric plant. $ per hour Calculate the amount of under- or overapplied overhead for the fabric plant. 3. a. Using the weighted average method, complete the following information regarding the Weaving and Pattern production process: 1. Physical flow schedule (measured in yards) ii. Materials Conversion Costs iii. Unit cost iv. Cost of goods transferred out b. To convert the output of the Weaving and Pattern Department to the output of the Coloring and Bolting Department, yards transferred is by c. Using the weighted average method, complete the following for the Coloring and Bolting Department: 1. Physical flow schedule (measured in bolts) ii. Equivalent units schedule (measured in bolts) iii. Unit cost $ Transferred-in Materials Materials Conversion Costs