Determining Manufacturing Costs Wagner Printing Inc. began printing operations on July 1. Jobs 7-01 and 7-02 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 7-03 and 7-04 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $2,390 of indirect materials and $8,500 of indirect labor were used during the month. The cost sheets, in summary form, for the four jobs during the month are as follows: Job 7-01 Job 7-02 Direct materials 24,790 Direct materials 11,590 Direct labor 9,500 Direct labor 4,900 Factory overhead 5,225 Factory overhead 2,695 Total 39,515 Total 19,185 ) Job 7-03 Job 7-04 Direct materials 34,520 Direct materials 7,140 Direct labor 10,500 Direct labor 1,400 Factory overhead ? Factory overhead ? Determine each of the following for July: a. Direct and indirect materials used. Direct materials used and transferred to Work in Process Indirect materials used and transferred to Factory Overhead is:1 E b. Direct and indirect labor used. ( Previous Next ) Job 7-03 Job 7-04 Direct materials 34,520 Direct materials 7,140 Direct labor 10,500 Direct labor 1,400 Factory overhead ? Factory overhead ? Determine each of the following for July: a. Direct and indirect materials used. Direct materials used and transferred to Work in Process $S Indirect materials used and transferred to Factory Overhead $:] b. Direct and indirect labor used. Direct labor used and transferred to Work in Process $:] Indirect labor used and transferred to Factory Overhead $[: c. Factory overhead applied (a single overhead rate is used based on direct labor cost). E d. Cost of completed Jobs 7-01 and 7-02. E e. Assume that in addition to indirect materials and indirect labor, factory overhead of $4,100 was incurred during July. Determine the overapplied or underapplied overhead for July. D l Vi The following is a list of various costs of producing sweatshirts. Classify each cost as either variable, xed, or mixed for the number of units produced and sold. 3. Electricity costs of $0.025 per kilowatt-hour. 'i b. Warehouse rent of $6,000 per month plus $0.50 per square foot of storage used. W c. Thread. W d. Zip used in sweatshirts. w e. Janitorial costs of $2,000 per month. W f. Advertising costs of $10,000 per month. 'i 9. Plant manager salary. W h. Color dyes for producing different colors of sweatshirts. W i. Salary of the production supervisor. W j. Straight-line depreciation on sewing machines. W k. Patterns for different designs. Patterns typically last many years before being replaced. \" I. Maintenance costs for the company's sewing machine. The cost is $2,000 per year W plus $0.001 for each machine hour of use. m. Property taxes on factory, building, and equipment. W n. Cotton and polyester cloth. W o. Hourly wages of sewing machine operators. 1 Relevant Range and Fixed and Variable Costs FirstClass Gaming Inc. manufactures components for computer games within a relevant range of 100,800 to 158,400 components per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Components produced 100,800 123,200 158,400 Total costs: Total variable costs $40,320 (d) (1) Total xed costs 44,352 (e) (k) Total costs $84,672 (0 (I) > Cost per unit: Variable cost per unit (a) (g) (m) Fixed cost per unit (b) (h) (n) Total cost per unit (c) (i) (0) Complete the cost schedule below. Round costs per unlt to the nearest cent. Cost Schedule Components produced 100,800 123,200 158,400 Total costs: Total variable costs $40,320 $:] E Total fixed costs 44,352 Total costs $34,672 (0 (I) Cost per unit: Variable cost per unit (a) (g) (m) Fixed cost per unit (b) (h) (n) Total cost per unit (c) (i) (0) Complete the cost schedule below. Round costs per unit to the nearest cent. Cost Schedule Components produced 100,800 123,200 158,400 Total costs: Total variable costs $40,320 $[:] Total fixed costs 44,352 C] Total costs $84,672 4: Cost per unit: Variable cost per unit 35' $ Fixed cost per unit I Total cost per unit E 3;: I EDD : Job Cost Sheet Hallmark Furniture Company renishes and reupholsters furniture. Hallmark Furniture uses a job order cost system. when a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efciency of operations and in preparing quotes on future jobs. On February 14, 20Y1, an estimate of $2,898 for reupholstering a chair and couch was given to Millard Schmidt. The estimate was based on the following data: Estimated direct materials: 30 meters at $34 per meter $ 1,020 Estimated direct labor: 20 hours at $30 per hour 600 Estimated factory overhead (75% of direct labor cost) 450 Total estimated costs $2,070 Markup (40% of production costs) 828 Total estimate $2,898 On February 17, the chair and couch were picked up from the residence of Millard Schmidt, 315 White Oak Drive, Columbus, Georgia, with a commitment to return them on March 15. The job was completed on March 9. The related materials requisitions and time tickets are summarized as follows: Materials Requisition No. Description Amount 122 15 meters at $34 $510 129 19 meters at $34 646 129 19 meters at $34 646 Time Ticket No. Description Amount T344 10 hours at $30 $300 T348 14 hours at $30 420 Instructions: 1. Complete the portion of the job cost sheet that would be prepared when the estimate is given to the customer. 2. Assign number 02-019 to the job, record the actual costs incurred, and complete the job cost sheet. JOB COST SHEET D Customer Millard Schmidt Date February 14, 20Y1 Address 315 White Oak Drive Date wanted March 15, 20Y1 Columbus, GA Date completed March 9, 20Y1 Item Reupholster couch and chair Job. No. 02-019 ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount 30 Meters at $34 E 20 Hours at $30 35:] Direct Materials $[:] Direct Labor S lb\" A Customer Millard Schmidt Date February 14, 20Y1 Address 315 White Oak Drive Date wanted March 15, 20Y1 Columbus, GA Date completed March 9, 20Y1 Item Reupholster couch and chair Job. No. 02-019 ESTIMATE Direct Materials Direct Labor Summary Amount Amount Amount 30 Meters at $34 E 20 Hours at $30 G Direct Materials G Direct Labor :l Factory Overhead C] Total G Total G Total cost C ACTUAL Direct Materials Direct Labor Summary Mat. Req. No. Description Amount Time Ticket No. Description Amount Item Amount Direct Materials G E G 122 15 Meters at $34 T344 10 Hours at $30 Direct Labor :l 129 19 Meters at $34 :l T348 14 Hours at $30 :l Factory Overhead C] Total $[:] Total $[:] Total Cost C Unit Cost Analysis Hathaway Trophies Inc. uses a job order cost system for determining the cost to manufacture award products (plaques and trophies). Among the company's products is an engraved plaque that is awarded to participants who complete an executive education program at a local university. The company sells the plaques to the university for $50 each. Each plaque has a brass plate engraved with the name of the participant. Engraving requires approximately 30 minutes per name. Improperly engraved names must be redone. The plate is screwed to an oak backboard. This assembly takes approximately 6 minutes per unit. Improper assembly must be redone using a new oak backboard. During the first half of the year, the university had two separate executive education classes. The job cost sheets for the two separate jobs indicated the following information: Job 05-1 May 2 Cost per Unit Units Job Cost Direct materials: Wood $ 7.50/unit 75 units $562.50 Brass 4.00/unit 75 units 300.00 Engraving labor 20.00/hr. 40 hrs. 800.00 Assembly labor 15.00/hr. 7.50 hrs. 112.50 Factory overhead 3.00/hr. 45 hrs. 135.00 Total $1,910.00 Plaques shipped + 75 Cost per plaque (rounded to nearest cent) $25.47 Job 08-11 August 25 Cost per Unit Units Job Cost Total $1,910.00 Plaques shipped + 75 Cost per plaque (rounded to nearest cent) $25.47 Job 08-11 August 25 Cost per Unit Units Job Cost Direct materials: Wood $ 7.50/unit 85 units $ 637.50 Brass 4.00/unit 85 units 340.00 D Engraving labor 20.00/hr. 50 hrs. 1,000.00 Assembly labor 15.00/hr. 8 hrs. 120.00 Factory overhead 3.00/hr. 48 hrs. 144.00 Total $2,241.50 Plaques shipped + 80 Cost per plaque (rounded to nearest cent) $ 28.02 a. Why did the cost per plaque increase from $25.47 to $28.02? More labor and materials were used per unit for Job 08-11 than did Job 05-1. w b. Based upon unit costs, what is an area of concern for Hathaway Trophies, Inc.? Engraving ' Total $1,910.00 Plaques shipped + 75 Cost per plaque (rounded to nearest cent) $25.47 Job 08-11 August 25 Cost per Unit Units Job Cost Direct materials: Wood $ 7.50/unit 85 units $ 637.50 Brass 4.00/unit 85 units 340.00 D Engraving labor 20.00/hr. 50 hrs. 1,000.00 Assembly labor 15.00/hr. 8 hrs. 120.00 Factory overhead 3.00/hr. 48 hrs. 144.00 Total $2,241.50 Plaques shipped + 80 There was an increase in material cost. There was an increase in labor cost. There was an increase in the overheads allocated. \\/ More labor and materials were used per unit for Job 08-11 than did Job 05-1. b. Based upon unit costs, what is an area of concern for Hathaway Trophies, Inc.? Eng raving V Total $1,910.00 Plaques shipped + 75 Cost per plaque (rounded to nearest cent) $25.47 Job 03-11 August 25 Cost per Unit Units Job Cost Direct materials: Wood $ 7.50/unit 85 units $ 637.50 Brass 4.00/unit 85 units 340.00 ) Engraving labor 20.00/hr. 50 hrs. 1,000.00 Assembly labor 15.00/hr. 8 hrs. 120.00 Factory overhead 3.00/hr. 48 hrs. 144.00 Total $2,241.50 Plaques shipped + 80 Cost per plaque (rounded to nearest cent) $ 28.02 a. Why did the cost per plaque increase from $25.47 to $28.02? More labor and materials were used per unit for Job 08-11 than did Job 05-1. v "a an area of concern for Hathaway Trophies, Inc.? \\I Engraving Assembly Both Engraving and assembly None of these Margin of safety Organic Health Care Products Inc. expects to maintain the same inventories at the end of 20Y8 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during 20Y8. A summary report of these estimates is as follows: Estimated Variable Cost Estimated Fixed Cost (per unit sold) Production costs: Direct materials $ 8.00 Direct labor 3.00 Factory overhead 3; 200,000 1.50 Selling expenses: Advertising 1,450,000 Sales salaries and commissions 93,000 1.85 Travel 340,000 Miscellaneous selling expense 2,000 0.10 Administrative expenses: _ Ofce and ofcers' salaries 300,000 Supplies 10,000 0.50 Miscellaneous administrative expense 5,000 0.05 Total $2,400,000 $15.00 It is expected that 400,000 units will be sold at a price of $25 a unit. Maximum sales within the relevant range are 500,000 units. I Drmlinl I: Production costs: Direct materials $ 8.00 Direct labor 3.00 Factory overhead $ 200,000 1.50 Selling expenses: Advertising 1,450,000 Sales salaries and commissions 93,000 1.85 Travel 340,000 Miscellaneous selling expense 2,000 0.10 Administrative expenses: > Ofce and ofcers' salaries 300,000 Supplies 10,000 0.50 Miscellaneous administrative expense 5,000 0.05 Total $2,400,000 $15.00 It is expected that 400,000 units will be sold at a price of $25 a unit. Maximum sales within the relevant range are 500,000 units. Determine the following based upon the estimates for 20Y8: 1. Margin of safety for 20Y8 in units of sales. :] units 2. Margin of safety for 20Y8 in dollars of sales. $:] 3. Margin of safety for 20Y8 expressed as a percentage of sales. :] %