Martinez Building Pty Ltd is one of the largest manufacturers and marketers of unique, custom-made residential...

  

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Martinez Building Pty Ltd is one of the largest manufacturers and marketers of unique, custom-made residential garage doors in Sydney, Australia. It also is a major supplier of industrial and commercial doors, grills and counter shutters for the new-construction, repair and remodel markets. Martinez Building Pty Ltd has developed plans for continued expansion of a new network of services operations that sell, install and service manufactured fireplaces, garage doors and related products. Martinez Building Pty Ltd job order cost and applies overhead to production on the basis of direct labour cost. In computing a predetermined overhead rate for the year 2022, the company estimated manufacturing overhead to be $24,000,000 and direct labour cost to be $20,000,000. In addition, it developed the following information Actual Costs Incurred During 2022 $ 30,000,000 $ 21,000,000 ● Insurance, factory $ 500,000 Indirect labour $ 7,500,000 Factory maintenance $ 1,000,000 Rent on factory building $11,000,000 Depreciation on factory equipment $ 2,000,000 ● ● ● Direct materials used Direct labour cost incurred Instructions Answer each of the following a) What are the adva ges of Martinez Building Pty Ltd if using process costing system? (5 Marks) b) On what basis does Martinez Building Pty Ltd allocate its manufacturing overhead? Compute the predetermined overhead rate for 2022. (5 Marks) c) Explain and compute the amount of the under- or overapplied overhead for 2022. (5 Marks) d) Martinez Building Pty Ltd had balances in the beginning and ending word in process and finished goods account as follows. (5 Marks) Work in process Finished Good 1st January 2021 $5,000,000 $13,000,000 31st December 2021 $4,000,000 $11,000,000 Determine the (1) cost of goods manufactured and (2) cost of goods sold for Martinez during 2021. Assume that any under- or overapplied overhead should be included in the cost of goods sold. e) During 2021, Job G408 was started and completed. Its cost sheet showed a total cost of $100,000 and the company prices its product at 50% above its cost. What is the price to the customer if the company follows this pricing strategy? Explain the profit to Martinez building Pty Ltd (10 Marks) Martinez Building Pty Ltd is one of the largest manufacturers and marketers of unique, custom-made residential garage doors in Sydney, Australia. It also is a major supplier of industrial and commercial doors, grills and counter shutters for the new-construction, repair and remodel markets. Martinez Building Pty Ltd has developed plans for continued expansion of a new network of services operations that sell, install and service manufactured fireplaces, garage doors and related products. Martinez Building Pty Ltd job order cost and applies overhead to production on the basis of direct labour cost. In computing a predetermined overhead rate for the year 2022, the company estimated manufacturing overhead to be $24,000,000 and direct labour cost to be $20,000,000. In addition, it developed the following information Actual Costs Incurred During 2022 $ 30,000,000 $ 21,000,000 ● Insurance, factory $ 500,000 Indirect labour $ 7,500,000 Factory maintenance $ 1,000,000 Rent on factory building $11,000,000 Depreciation on factory equipment $ 2,000,000 ● ● ● Direct materials used Direct labour cost incurred Instructions Answer each of the following a) What are the adva ges of Martinez Building Pty Ltd if using process costing system? (5 Marks) b) On what basis does Martinez Building Pty Ltd allocate its manufacturing overhead? Compute the predetermined overhead rate for 2022. (5 Marks) c) Explain and compute the amount of the under- or overapplied overhead for 2022. (5 Marks) d) Martinez Building Pty Ltd had balances in the beginning and ending word in process and finished goods account as follows. (5 Marks) Work in process Finished Good 1st January 2021 $5,000,000 $13,000,000 31st December 2021 $4,000,000 $11,000,000 Determine the (1) cost of goods manufactured and (2) cost of goods sold for Martinez during 2021. Assume that any under- or overapplied overhead should be included in the cost of goods sold. e) During 2021, Job G408 was started and completed. Its cost sheet showed a total cost of $100,000 and the company prices its product at 50% above its cost. What is the price to the customer if the company follows this pricing strategy? Explain the profit to Martinez building Pty Ltd (10 Marks)

Answer rating: 100% (QA)

a The company is using a job order system because each job or batch must have its own distinguishing ... View the full answer