Question 1(20 marks)

AAA Co. has a job-order costing system. The company uses predetermined overhead rates to apply manufacturing overhead costs to individual jobs. The predetermined overhead rate in Department A is based on machine hours, and in Department B is based on direct materials cost. At the beginning of the 29X4, the following estimates were available for the year:

Department

A

B

Machine-hours

80,000

20,000

Direct labour-hours

30,000

60,000

Direct materials cost

$240,250

$300,000

Direct labour cost

$270,000

$570,000

Manufacturing overhead

$420,000

$705,000

Job 28 was started on April 7 and completed on May 18.Cost records show the following information about job 28:

Department

A

B

Machine-hours

450

75

Direct labour-hours

70

140

Direct materials cost

$1,000

$1,100

Direct labour cost

$700

$900

At the end of the year, the records of AAA showed the following actual costs for all jobs for the year:

Department

A

B

Machine-hours

75,000

35,000

Direct labour-hours

30,000

70,000

Direct materials cost

$160,000

$290,000

Manufacturing overhead cost

$390,000

$705,000

Required:

a.) Calculate the predetermined overhead rates for Department A and Department B.

b.) Calculate the overhead cost applied to Job 28 and the total cost of job 28 based on the predetermined overhead rates..

c.) Calculate the amount of underapplied or overapplied overhead in each department at the end of the current year.

Question 2 (20 marks)

Super Soap Company uses the weighted-average method in its process costing system. The Mixing Department of Super Soap reported the following information for the month of November:

Beginning work in process: 30% complete for materials, and 80% complete for conversion.

Ending work in process: 40% complete for materials, and 70% complete for conversion.

Cost Summary

Materials

Conversion

Work in process, November 1

$ 84,500

$ 28,600

Added during November

$146,000

$39,400

Units

Work in process, November 1

30,000

Started in November

608,000

Total

638,000

Work in process November 30

28,000

Completed and transferred out

(you calculate this number)

Required

Complete a Production Cost Report for the company's November production using the weighted-average method. You will need to include the following:

A.Units to account for.

B.The equivalent units of production for materials and conversion.

C.The cost per equivalent unit for materials and conversion. (Roundto four decimals. There may be a small final rounding error).

D.The total cost assigned to units transferred out of the Mixing Dept. during November (costs must be in dollars and cents).

E.The total cost of the work in process inventory on November 30 (costs must be in dollars and cents).

F.A cost reconciliation.

Use a standard format for a production cost report.

Question 3(20 marks)

Renforth Manufacturing uses a traditional costing system to apply manufacturing overhead to its products.Renforth uses a predetermined overhead rate based on direct labour hours.Information about its two products is below:

Benches

Chairs

Direct materials per unit

$65

$42

Direct labour cost $12 per hour

Direct labour hours per unit

2

1.5

Estimated annual units produced

7,000

9,000

Total manufacturing overhead for the year is estimated at $240,120, and the estimated total labour hours for the year is 27,500.

Renforth is considering using activity-based-costing instead of a plant-wide overhead rate.The data for an ABC system is below:

Activities and Activity Measures

Estimated total Overhead Cost for the year

Cutting (machine hours)

$30,000

Assembly (per batch)

130,000

Finishing (direct labour hours)

85,000

Total

245,000

Activities and Activity Measures

Benches

Chairs

Total

Cutting (machine hours)

2,000 hours

2,400 hours

4,400 hours

Assembly (per batch)

50 batches

60 batches

110 batches

Finishing (direct labour hours)

6,200 hours

8,800 hours

15,000 hours

Required:

a. Determine the estimated manufacturing overhead cost per unit and total cost per unit for each of the company's two products under the traditional costing system using the predetermined overhead rate.

b. Determine the manufacturing overhead cost per unit for each of the company's two products under activity-based costing system.

c.What additional information would an ABC system provide for management?

Do you think they should switch to an ABC system?Why or why not?

Show your calculations, and ensure your answers are clearly presented and labelled.Keep in mind that rates and costs are money.As necessary, round rates to dollars and cents.

Question 4(20 marks)

TheSalesBudget (in units)forCauldronLtd.forthefirstfourmonthsof2021is givenbelowforpropane heatersmanufacturedbyCauldron:

January21,000

February36,000

March61,000

April41,000

CauldronLtd.'s inventoryoffinished goodsattheend ofeach monthshould equal20%ofthenextmonth's sales.However, on December 31,2020,thefinishedgoodsinventorytotaledonly4,000units.

Required:

Make aproduction budget showingthequantityofunitstobeproduced eachmonthforJanuary,February,March,andintotalforthe quarter.Useatabularformat as illustrated in the textbook.