Brighton Services repairs locomotive engines. It employs 100 full-time workers at $16 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:
Bnghton Services apai s i con otva angina; t emplo 100 ful t a workers a $18 per hour espna opera ng at capacit last year's pano mance was great disappointment to the managars n tota 10 ts e accepted and comp ed neur ng tha blown total cost Direct msterisl Direct labor Manufecturing ovehead 31,042400 1080 000 Of the $1,080.000 manufacturing overhead, 35 percent was variable overhead and 05 percent was foed This year, Brighton Services expects to operate at the same activity level as last year, and overhead costs and the wage rate are not axpected to change. For the first quarter of this year Brighton Services compleed two jobs and was beginning the third (Job 103). The costs incurred follow eLabor 137 900 497.000 0D C00 313,00D 04,700 10 400 271,900 117000 102 103 Total manufacturing overhead otal marketing and administrative ooets You are a consultant associaned with Lodi Consutants, which Brighton Services has asked for help. Lod's senior partner has examined Brighton Services's accounts and has decided to divide actusl factory overhead by job into foxed and variable portons as folows Acnual 101 102 103 30,500 28.200 3 104,700 88.900 3 64,100 3207.800 In the Srst quarter of this year 30 percent of marketing and adminisrative cost was variable and 70 percent was fixed You are told that Jobs 101 and 102 were sold for 5800.000 and $504.00D, respectively. All over- or underapplied overhead for the quarter is aritten of to Cost of Goods Sold a. Present in T-accounts the actual manufacturing cost flows for tho three jobs in the first quarter of this year. Bag bal Bag bal 137,900 101: DM 100.000102 DM 4.700 103 O 497,000 101:DL 313.000 102 DL 98.400 103 DL End. bal End. bal 0600 101:Variable 2.200 102Varible 5.300 103 Variabe 84,1 207,800 104,700 101:Fod 8.900 102 Foed 4.200103 Fued Actual End. bal End bal Beg bal Total DM Total DL Beg bal Total 101 Finished Goods Tctal 102 Finished Goods 332 Total 101 Finished Goods 300,300 Cotof goods sold 1,008 530,100 Total 102 Finished Goods 530.1 otal Ficed 207.800 4.100 End bal End. bal Bag bal Finished Goods 1,300.300 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.) Overhead Rate Per Direct L Variable overhead rateS Fixed overhead rate 1.40 2.60 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.) Beg. bal Beg. bal 137,900 101: DM 100,000 102: DM 94.700 103: DM 497,000 101: DL 313.000 102 DL 198.400 103: DL End. bal. 332.600 End. bal. 1,008.400 Fixed Manufacturing 101: Fixed 102 Fixed 103: Fixed Actual 64.100 101: Variable 102: Variable 103: Variable Actual 207,800 End. bal. 64100 End. bal. Finished Goods I Beg. bal Beg. bal Total 101 Finished Goods Total 102 Finished Goods Total DM Total 101 Finished Goods Cost of goods sold Total DL 1,008.400 Total 102 Finished Goods otal Fixed otal Variable End. bal. End. bal. 1,008,40 of Goods -or Over-Applied Overhe Beg. bal. Finished Goods Beg. bal. End. bal. End. bal. d. Calculate operating profit (loss) for the first quarter of this year under actual and normal costing systems
