Question
Magic Speed currently manufactures two different types of products in 2021. The controller believes the costing system, which currently only uses inspections as a cost
Magic Speed currently manufactures two different types of products in 2021. The controller believes the costing system, which currently only uses inspections as a cost driver, may be providing misleading cost information. They would like you to provide the JE required using the two methods, traditional and ABC.
Short | Long | Actual Hours | |
Budgeted Sales (Units) | 12 | 20 | |
Assembly Hours | 5 | 35 | 400 |
Inspection Hours | 6 | 18 | 300 |
Paint Gallons | 8 | 34 | 400 |
Tests | 10 | 7 | 500 |
Short | Long | Budgeted Hours | |
Budgeted Sales (Units) | 16 | 25 | |
Assembly Hours | 16 | 15 | 300 |
Inspection Hours | 12 | 18 | 400 |
Paint Gallons | 22 | 25 | 300 |
Tests | 1 | 12 | 400 |
1) Using the traditional method i. Determine the companys predetermined overhead rate(s) applied & the overhead applied to Short ii. Provide the MOH true up journal entry required for this method at the end of the year 2) Using the ABC method i. Determine the companys predetermined overhead rate(s) applied & the overhead applied to Long ii. Provide the MOH true up journal entry required for this method at the end of the year
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