Brighton Services repairs locomotive engines. It employs 1 0 0 full - time workers at $ 2
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Question:
Brighton Services repairs locomotive engines. It employs fulltime workers at $ per hour. Despite operating at capacity, last year's performance was a great disappointment to the managers. In total, jobs were accepted and completed, incurring the following total costs.
Direct materials $
Direct labor
Manufacturing overhead
Of the $ manufacturing overhead, percent was variable overhead and percent was fixed.
This year, Brighton Services expects to operate at the same activity level as last year, and overhead costs and the wage rate are not expected to change. For the first quarter of this year, Brighton Services completed two jobs and was beginning the third Job The costs incurred follow.
Job Direct Materials Direct Labor
$ $
Total manufacturing overhead
Total marketing and administrative costs
You are a consultant associated with Lodi Consultants, which Brighton Services has asked for help. Lodi's senior partner has examined Brighton Services's accounts and has decided to divide actual factory overhead by job into fixed and variable portions as follows.
Actual Manufacturing Overhead
Variable Fixed
$ $
$ $
In the first quarter of this year, percent of marketing and administrative cost was variable and percent was fixed. You are told that Jobs and were sold for $ and $ respectively. All over or underapplied overhead for the quarter is written off to Cost of Goods Sold.
Required:
a Present in Taccounts the actual manufacturing cost flows for the three jobs in the first quarter of this year.
b Using last year's overhead costs and direct laborhours as this year's estimate, calculate predetermined overhead rates per direct laborhour for variable and fixed overhead.
c Present in Taccounts the normal manufacturing cost flows for the three jobs in the first quarter of this year. Use the overhead rates derived in requirement b
d Calculate operating profit loss for the first quarter of this year under actual and normal costing systems: I am stuck on "Underor Overapplied Overhead" Please explain how to come up with the answer. I know that it is 'Underapplied' and 'Overapplied' but cannot get the correct amounts. Thank you!
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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