Brighton Services repairs locomotive engines. It employs 100 full-time workers at $20 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 Direct labor Manufacturing overhead $1,035,400 4,000,000 1,040,000 Of the $1,040,000 manufacturing overhead, 30 percent was variable overhead and 70 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: Direct Labor Job 101 102 103 Total manufacturing overhead Total marketing and administrative costs Direct Materials $ 137,200 93,000 94,000 $490,000 312,400 197,600 271,200 112,000 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: 101 102 103 Actual Manufacturing Overhead Variable Fixed $ 29,900 $ 104,000 27,500 88,200 4,600 17,000 $ 62,000 $ 209,200 In the first quarter of this year, 40 percent of marketing and administrative cost was variable and 60 percent was fixed. You are told that Jobs 101 and 102 were sold for $850,000 and $550,000, 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: 101 102 103 Actual Manufacturing Overhead Variable Fixed $ 29,900 $ 104,000 27,500 88,200 4,600 17,000 $ 62,000 $ 209,200 In the first quarter of this year, 40 percent of marketing and administrative cost was variable and 60 percent was fixed. You are told that Jobs 101 and 102 were sold for $850,000 and $550,000, 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. 0 0 Beg. bal. 0 0 0 0 520,000 101: DL 138,400 X 101: DM 105,000 X 102: DM 0 0 313,600 102: DL 195,300 X 103: DL 0 95,200 X 103: DM 0 0 0 0 0 End, ball 338,600 End. bal. 1,028,900 Underapplied Underapplied 101: Fixe Variable Manufacturing Overhead X 65,600 X 31,100 X 101: Variable 0 28,700 X 102: Variable 0 5,800 103: Variable OOO Fixed Manufacturing Overhead 206,800 X 105,200 0 89,400 0 12,200 102: Fixe 103: Fixe 0 0 0 0 End, bal. End, bal. Work-in-Process Inventory Finished Goods Inventory Beg. bal. 0 0 0 0 Beg. bal. Total 101 Finished Goods Total DM Cost of g 794,700 338,600 X 794,700 X 1,331,400 sold Total 101 Finished Goods Total 102 Finished Goods Total DL 1,028,900 X 536,700 Total 102 Finished Goods 536,700 X 0 Total Variable 0 0 0 65,600 X 206,800 x Total Fixed 0 End. bal. 0 0 End, bal 308,500 Cost of Goods sold Beg, bal 0 0 Finished Goods 1,331,400 X 0 0 0 End, bal 1,331,400 "Red text indicates no response was expected in a cell or a formula-based calculation is incorrect: no points deducted. b. Using last year's overhead costs and direct Labar th lau 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 0 Beg. bal. 0 0 Beg. bal 0 0 138,400 x 101: DM 0 0 105,000 X 102: DM 0 520,000 X 101: 313,600 102 195,300 X 103: 0 95,200 103: DM 0 0 End. bal. 338,600 End, bal 1,028 900 Fixed Manufacturing Overhead 206.800 X 105,200 Underapplied Underapplied 101: Variable Manufacturing Overhead 65,600 31,100 X 101: Variable 28,700 X 102: Variable 0 5.800 X 103: Variable 0 89.400 102 12,200 x 103: 0 0 0 End. bal. End bal. Work-in-Process Inventory Finished Goods Inventory Beg. bal. 0 Beg bal 0 Total DM 338.600 * 794,700 Total 101 Finished Goods 794.700 1,331.400 Cost sold Total 101 Finished Goods Total 102 Finished Goods Total DL 1.028.900 536.700 Total 102 Finished Goods 536.700 0 0 0 0 Total Variable Total Fixed 65.600 X 206,800 X 0 End, bal 0 End bal. 308,500 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. Use the rounded values in the subsequent requirements.) Predetermined Overhead Rate (per Direct Labor-Hour) 1.56 Variable Overhead Rate Fixed Overhead Rate $ 3.64 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). Materials Inventory Wages Payable 0 Beg bal. 0 Beg. bal. 138,400 101: DM 0 0 102: DM 0 105.000 95.200 0 103: DM 0 19 0 0 0 c. Present in T-accounts the normal manufacturing cost flows for the three jobs in the first quarter of this derived in requirement (b). Materials Inventory Beg. bal. o 0 Beg, bal. 0 o 138,400 X 101: DM 105,000 X 102: DM 95,200 X 103: DM O 0 0 End. bal. 338.600 End. bal. Variable Manufacturing Overhead 65.600 X x 101: Variable x 102: Variable Overapplied 103: Variable End, bal. 65600 End. bal. Work-in-Process Inventory Beg. bal. Beg. bal. 23 x x X End bal. End, ball Cost of Goods sold Beg bal. Finisned Goods Beg, bal End. ba Wages Payable 0 0 Beg. bal. 0 520,000 X 101: DL 0 313,600 X 102. DL 0 195,300 102: DL 0 0 1,028,900 End. bal. Fixed Manufacturing Overhead X X. Eng bali Finished Goods Inventory Beg. bal. Cost of goods sold End. bal Under-or Over-Applied Overhead Beg bal End.ba Finished Goods e test etaponse was expected in a cell or a formula-based calculation is incorrect; na point deducted. d. Calculate operating profit (loss) for the first quarter of this year under actual and normal costing systems. Actual Normal