ACC 6400 Management Accounting Seminar By Dr. Hung Chan San Diego Fashions. Inc. (SDF), a local...
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ACC 6400 Management Accounting Seminar By Dr. Hung Chan San Diego Fashions. Inc. (SDF), a local company which uses a job-order normal costing system, had two jobs in process at the start of 2023: job no. 101 ($168,000) and job no. 102 ($107,000). The following information is available: a) The company applies manufacturing overhead on the basis of machine hours. SDF has budgeted 31,800 machine hours to be used consistently in 2023. Data concerning machine hours and manufacturing overhead incurred during 2022 follow. Month January February March April May June July August September October November December Job No. 101 102 103 104 Machine hours 3,800 3,600 2,300 2,050 2,200 2,400 2,000 2,800 2,600 2,100 2,200 2,400 88,000 30,000 b) company started/worked on four jobs during the first quarter direct labor incurred, and machine hours consumed were as follows: Direct Material $42,000 Direct Labor $70,000 44,000 MOH $138,700 137,300 103,250 100,800 110,100 110,550 110,000 130,000 17,600 120,400 120,120 100,200 112,350 115,350 2023. Direct materials used, Machine Hours ? 2,400 3,000 2,000 c) Manufacturing overhead during the first quarter included charges for depreciation ($68,000), indirect labor ($120,000), indirect materials used ($10,000), and other factory costs ($279,000). d) San Diego Fashions completed job no. 101 and job no. 102. Job no. 101 was sold for $425,400 on account, reporting a gross margin of $19,400 for the firm. Required (show your work to receive partial credit): 1) Based on SDF's 2022 MOH cost data, what is your estimated monthly fixed MOH cost and variable MOH cost per machine hours respectively? What cost behavior did the SDF's 2022 MOH cost demonstrate? 2) What is your estimate of SDF's 2023 budgeted MOH based on 2022 incurred MOH data? Discuss two limitations of your estimate. 3) Determine the cost of jobs still in production reported on March 31 general ledger. 4) Assume SDF's budgeted MOH was $1,406,000, how much was the manufacturing overhead under- or overapplied for the first quarter of 2023? What would you recommend SDF to account for the amount? Why? How would it affect your profitability analysis of the Job no. 101? 5) Should SDF use its 2023 budgeted MOH cost or its 2022 incurred MOH cost as a benchmark to evaluate its managers' performance in controlling 2023 MOH cost variance? Why? 6) Can you recommend a better benchmark for MOH variance analysis and control? Explain a pros of your recommended benchmark. ACC 6400 Management Accounting Seminar By Dr. Hung Chan San Diego Fashions. Inc. (SDF), a local company which uses a job-order normal costing system, had two jobs in process at the start of 2023: job no. 101 ($168,000) and job no. 102 ($107,000). The following information is available: a) The company applies manufacturing overhead on the basis of machine hours. SDF has budgeted 31,800 machine hours to be used consistently in 2023. Data concerning machine hours and manufacturing overhead incurred during 2022 follow. Month January February March April May June July August September October November December Job No. 101 102 103 104 Machine hours 3,800 3,600 2,300 2,050 2,200 2,400 2,000 2,800 2,600 2,100 2,200 2,400 88,000 30,000 b) company started/worked on four jobs during the first quarter direct labor incurred, and machine hours consumed were as follows: Direct Material $42,000 Direct Labor $70,000 44,000 MOH $138,700 137,300 103,250 100,800 110,100 110,550 110,000 130,000 17,600 120,400 120,120 100,200 112,350 115,350 2023. Direct materials used, Machine Hours ? 2,400 3,000 2,000 c) Manufacturing overhead during the first quarter included charges for depreciation ($68,000), indirect labor ($120,000), indirect materials used ($10,000), and other factory costs ($279,000). d) San Diego Fashions completed job no. 101 and job no. 102. Job no. 101 was sold for $425,400 on account, reporting a gross margin of $19,400 for the firm. Required (show your work to receive partial credit): 1) Based on SDF's 2022 MOH cost data, what is your estimated monthly fixed MOH cost and variable MOH cost per machine hours respectively? What cost behavior did the SDF's 2022 MOH cost demonstrate? 2) What is your estimate of SDF's 2023 budgeted MOH based on 2022 incurred MOH data? Discuss two limitations of your estimate. 3) Determine the cost of jobs still in production reported on March 31 general ledger. 4) Assume SDF's budgeted MOH was $1,406,000, how much was the manufacturing overhead under- or overapplied for the first quarter of 2023? What would you recommend SDF to account for the amount? Why? How would it affect your profitability analysis of the Job no. 101? 5) Should SDF use its 2023 budgeted MOH cost or its 2022 incurred MOH cost as a benchmark to evaluate its managers' performance in controlling 2023 MOH cost variance? Why? 6) Can you recommend a better benchmark for MOH variance analysis and control? Explain a pros of your recommended benchmark.
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1 To estimate the monthly fixed MOH cost and variable MOH cost per machine hour we can use the data from 2022 to analyze the cost behavior of SDFs MOH ... View the full answer
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Authors: Leslie G. Eldenburg, Susan Wolcott, Liang Hsuan Chen, Gail Cook
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