Question
Shaban Company (SC) produces elegant Pistol Pete bobbleheads using a sophisticated 3D printing manufacturing process. SC uses a normal costing system and machine hours (MH)
Shaban Company (SC) produces elegant Pistol Pete bobbleheads using a sophisticated 3D printing manufacturing process. SC uses a normal costing system and machine hours (MH) to apply overhead to production. Any manufacturing overhead variance is closed to COGS at the end of the year.
SC sold 45,000 bobbleheads during the past calendar year. The bobbleheads sell for $50 each. SCs accounting records provide the following information for the past year:
Estimated Manufacturing Overhead ............. $500,000
Estimated direct labor hours ...................... 50,000 DLH
Estimated machine hours .......................... 95,000 DMH
Actual direct labor hours .......................... 55,000 DLH
Actual machine hours .............................. 92,000 MH
Purchases of direct materials ...................... $350,000
Direct materials inventory, January 1 ............ $15,000
Direct materials inventory, December 31 ........ $40,000
Direct labor dollars .................................. $725,000
Maintenance on factory equipment................ $145,000
Depreciation, sales headquarters.................. $30,000
Depreciation, factory equipment .................. $55,000
Property taxes on the factory ...................... $22,000
Property taxes on sales headquarters .............. $16,000
Utilities, factory ..................................... $128,000
Utilities, sales headquarters ........................ $1,900
Insurance on the factory ............................ $17,000
Salary, sales supervisor ............................. $90,000
Salary, Administration .............................. $150,000
Work in process inventory, January 1 ............ $25,000
Work in process inventory, December 31......... $45,000
Finished goods inventory, January 1 .............. $10,000
Finished goods inventory, December 31 ......... $5,000
Effective tax rate .................................... 35%
Required:
What was the Predetermined Overhead Rate for Shaban Company? ____________________
What was the MOH variance for the year? ____________________
How much is Cost of Goods Manufactured for Shaban Company? ____________________
How much is Adjusted Cost of Goods Sold for Shaban Company? ____________________
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