2. Southern Rim Parts estimates its manufacturing overhead to be $360,500 and its direct labor costs to be $1,030,000 for year 1. The first three jobs that Southern Rim worked on had actual direct labor costs of $62,000 for Job 301, $87,000 for Job 302, and $160,000 for Job 303. For the year, actual manufacturing overhead was $414,000 and total direct labor cost was $837,000. Manufacturing overhead is applied to jobs on the basis of direct labor costs using predetermined rates. Required: a. How much overhead was assigned to each of the three jobs, 301, 302, and 30? Job 301 Job 302 Job 303 b. What was the over- or underapplied manufacturing overhead for year 1? manufacturing overhead 3. Toms Tool & Die uses a predetermined factory overhead rate based on machine-hours. For August, Toms budgeted overhead was $150,500 based on a budgeted volume of 43,000 machine-hours. Actual overhead amounted to $143,000 with actual machine-hours totaling 40,500. Required: What was over- or underapplied manufacturing overhead in August? (Do not round intermediate calculations.) overhead 4.Marine Components produces parts for airplanes and ships. The parts are produced to specification by their customers, who pay either a fixed price (the price does not depend directly on the cost of the job) or price equal to recorded cost plus a fixed fee (cost plus). For the upcoming year (year 2), Marine expects only two clients (client 1 and client 2). The work done for client 1 will all be done under fixed-price contracts while the work done for client 2 will all be done under cost-plus contracts. The controller at Marine Components chose direct labor cost as the allocation base in year 2, based on what she considered reflected the relation between overhead and direct labor cost. Year 3 is approaching and again the company only expects two clients: client 1 and client 3. Work for client 1 will continue to be billed using fixed-price contracts, and client 3 will be billed based on cost-plus contracts. Manufacturing overhead for year 3 is estimated to be $11 million. Other budgeted data for year 3 include: Client 1 Client 3 Machine-hours (thousands) 4,400 6,600 Direct labor cost ($000) $ 2,000 $ 2,000 ________________________________________ Required: a. Compute the predetermined rate assuming that Marine Components uses machine-hours to apply overhead. (Round your answer to 2 decimal places.) Application rate per machine hour b. Compute the predetermined rate assuming that Marine Components uses direct labor cost to apply overhead. Application rate % of direct labor cost 5.Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 445 hours for Massive Airframes and 661 hours for Gigantic Drydocks. AB bills clients at the rate of $503 per hour; labor cost for its professional staff is $220 per hour. Overhead costs in March totaled $40,370. Overhead is applied to clients at $44 per labor-hour. In addition, AB had $199,800 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead Required: a. Show labor and overhead cost flows through T-accounts Wages Payable Work-In-Process Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Cost of Services Billed Service Overhead Control Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Applied Service O.H. Beg. bal. End. bal. 0 . b. Prepare an income statement for the company for March. ALLOCATION BUSTERS Income Statement For the Month Ended March 31 6.The following T-accounts represent September activity: Required: Compute the missing amounts indicated by the letters (a) through (i). Materials Inventory BB (9/1) 8,000 (a) 5,100 (b) EB (9/30) 9,600 Work-In-Process Inventory BB (9/1) 20,800 179,200 121,000 98,300 EB (9/30) 17,000 Finished Goods Inventory BB (9/1) 14,900 (e) (f) EB (9/30) (g) Cost of Goods Sold 396,900 Applied Overhead Control (d) Manufacturing Overhead Control 121,000 5,100 36,200 34,000 2,500 Wages Payable 124,300 162,000 (c) 36,200 119,500 EB (9/30) Accumulated DepreciationPlant & Equipment 203,000 BB (9/1) (h) 237,000 EB (9/30) Accounts PayableMaterial Suppliers 105,000 Prepaid Expenses BB(9/1) 23,500 (i) EB(9/30) 21,000 Materials Inventory Work-In-Process Inventory Beg. bal.(9/1) 8,000 Beg. bal.(9/1) 20,800 5,100 179,200 121,000 98,300 End. bal.(9/30) 9,600 End. bal.(9/30) 17,000 Finished Goods Inventory Cost of Goods Sold Beg. bal.(9/1) 14,900 Beg. bal.(9/1) End. bal.(9/30) End. bal.(9/30) 0 0 Applied Overhead Control Manufacturing Overhead Control Beg. bal.(9/1) 121,000 5,100 36,200 End. bal.(9/30) 0 0 34,000 2,500 Wages Payable Accumulated DepreciationPlant & Equipment Beg. bal.(9/1) Beg. bal.(9/1) 203,000 162,000 124,300 36,200 End. bal.(9/30) 237,000 End. bal.(9/30) 119,500 Accounts PayableMaterial Suppliers Prepaid Expenses Beg. bal.(9/1) Beg. bal.(9/1) 23,500 End. bal.(9/30) 0 0 End. bal.(9/30) 21,000 7. Brighton Services repairs locomotive engines. It employs 100 full-time workers at $17 per hour. Despite operating at capacity, last year's performance was a great disappointment to the managers. In total, 10 jobs were accepted and completed, incurring the following total costs: Direct materials $ 1,054,400 Direct labor 4,760,000 Manufacturing overhead 1,120,000 ________________________________________ Of the $1,120,000 manufacturing overhead, 35 percent was variable overhead and 65 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 103). The costs incurred follow: Job Direct Materials Direct Labor 101 $ 139,100 $ 505,000 102 112,000 314,700 103 95,900 196,000 Total manufacturing overhead 273,100 Total marketing and administrative costs 129,000 ________________________________________ 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 101 $ 31,800 $ 105,900 102 29,400 90,100 103 6,500 9,400 $ 67,700 $ 205,400 ________________________________________ In the first quarter of this year, 30 percent of marketing and administrative cost was variable and 70 percent was fixed. You are told that Jobs 101 and 102 were sold for $875,000 and $588,000, respectively. All over- or underapplied overhead for the quarter is written off to Cost of Goods Sold. Required: a. Present in T-accounts the actual manufacturing cost flows for the three jobs in the first quarter of this year. Materials Inventory Wages Payable Beg. bal. Beg. bal. End. bal. End. bal. Variable Manufacturing Overhead Fixed Manufacturing Overhead End. bal. End. bal. Work-in-Process Inventory Finished Goods Inventory Beg. bal. Beg. bal. Cost of goods sold End. bal. End. bal. Cost of Goods Sold Beg. bal. Finished Goods End. bal. b. Using last year's overhead costs and direct labor-hours as this year's estimate, calculate predetermined overhead rates per direct labor-hour for variable and fixed overhead. (Round your answers to 2 decimal places.) Predetermined Overhead Rate (Per Direct Labor-Hour) Variable overhead rate Fixed overhead rate c. Present in T-accounts the normal manufacturing cost flows for the three jobs in the first quarter of this year. Use the overhead rates derived in requirement (b). (Do not round intermediate calculations.) Materials Inventory Wages Payable Beg. bal. Beg. bal. End. bal. End. bal. Variable Manufacturing Overhead Fixed Manufacturing Overhead End. bal. End. bal. Work-in-Process Inventory Finished Goods Inventory Beg. bal. Beg. bal. Cost of goods sold End. bal. End. bal. Cost of Goods Sold Under-or Over-Applied Overhead Beg. bal. Beg. bal. Finished Goods End. bal. End. bal. Reply Reply All Forward