T.O.T.E.S. CASE STUDY TRILLIUM COMPANY DESCRIPTION AND OVERVIEW Tonia Odenburg and Tara Evans were life-long friends. One earned a degree in accounting and the other became a nutritionist. Both were accomplished seamstresses, were concerned about the impact plastic grocery bags had on the environment and hand created reusable grocery bags for their personal use. After numerous compliments on the design and strength of their bags from store clerks and customers, they developed a business plan and started TOTES They called their version of the grocery bag a tote and sold them to grocery stores and small community farms. The company has grown rapidly and is now operating near capacity. EMPLOYEES Tonia is the president and Tara is the controllet. Both individuals work full time and are salaried. Other employees include: Full-Time Salaried Employees: Plant manager Plant maintenance supervisor o Other administrative staff accountant, receptionist, finished goods warchouse manager) Hourly Employees: 3 employee(s) in the cutting department o 2 employee(s) in the sewing department Part-time employee who operates the machine that prints logos on the totes The hourly employees are all considered direct labor employees. Historically, the hourly employees carn an average of $20 per hour, including fringe benefits and payroll taxes. All hourly employees work 40 hours each week, except for the part-time employee who worka 20 hours each week I T.O.T.E.S. CASE STUDY - TRILLIUM MATERIALS Each grocery bag requires 1/4 yard of 60" wide fabric and 1-1/2 yards of webbing. The fabric costs $3.60 per yard. Webbing costs $0.76 per yard. Thread is purchased in 500-yard spools and is considered an indirect material. After the totes pass quality control they are silk- screened with a customer's logo and the TO.T.E.S. Iabel is attached. Both the logo ink and the company labels are indirect materials. MANUFACTURING OVERHEAD TOTES allocates manufacturing overhead using a plantwide overhead rate based on machine hours in the cutting department. The cutting machines operate 95% of the hours worked by the cutting department employees. The plant operates 50 weeks per year. INVENTORY TOTES operates on a just-in-time basis in regards to both raw materials and finished goods. Work-in-proces inventory is negligible at the end of each month. The company has found that it needs to have 20% of the following month's production requirements on hand at the end of each month in order to meet sales projections. They plan to have 5% of the fabric and 10% of the webbing required for the following month's production on hand at the end of each month. I SALE FORECAST In the upcoming year. T.O.T.E.S. management forecasted sales of 500,000 totos. Bach toto sells for 54.95. Tu estimated annual revenue and expenses based on that level of sales and production Hier estimates we shown on Ext. D48 fx =(D30-D47) B T.O.T.E.S. Operating Budget - 20XX 7 2,475,000 1,170,000 This section is for all product costs - 2 direct materials, 3 direct labor & 10 manufacturing overhead accounts. 207,500 600.000 570,000 $ 120,000 7,500 80,000 $ 4,200 7,500 38,000 14,000 26,000 32,000 68,000 42,000 27,000 50,000$ SALES REVENUES 0 COST OF GOODS SOLD COSTS (at standard) 1 Direct Materials 2 Fabric s 3. Webbing $ Direct Labor 5 Wages- Cutting department $ 6 Wages-Printing department $ 7 Wages-Sewinging department $ 3 Manufacturing Overhead Company Labels $ Depreciation Sewing Machines and cutting machines $ 1 Factory Utilities (Mixed cost) $ 2 Insurance-Plant $ 3 Logo Ink $ 3 Plant Maintance Supervisor $ 5 Plant Manager $ 5 Rent-Plant Building $ Repaires and maintenance - Plant $ Thread $ TOTAL COST OF GOODS SOLD (TOTAL PRODUCT COSTS) GROSS PROFIT SELUNG, GENERAL AND ADMINISTRATIVE COSTS Administrative Office Supplies S Administrative stoff,e.eg. Accountant ect $ Administrative Payroll and Fringe $ Advertising. Trade shows, Travel and Entertainment $ Depreciation Admin Furniture and Equipment $ Equipment lease-Administrative offices $ Excutive Salaries $ Freight and Postage- Administrative $ Insurance Company Liability $ Legal and Professional $ Rent-Administrative Building $ Sales Commissions $ Sales Solares $ Shipping and Handling of Finished product/Selling) $ + 308,800 1,686,300 788,700 $ 197,350 439,350 3,500 $ 125,000 $ 115,800 45,000 2.450 5,000 160.000 2.500 9,000 5,000 11.000 99,000 12.000 40,350 This section is for all period costs. TOTAL PERIOD COSTS OPERATING INCOME 63000 152,000 Hint: Operuting Inc S IAB 1 - OPERATING BUDGET + T.O.T.E.S. Case Study - TRILLIUM Name: JOB COSTING LAB 2 T.O.T.E.S. currently uses a job costing system to allocate costs to each job. Although their products are very similar, each customer requires a different logo on their custom tote. Furthermore, Tonia and Tara have started experimenting with different sizes and lines of product in order to expand their market. Lab 2 has three parts - calculating standard costs, allocating costs to a specific job, and recording the flow of costs for that job. PART 1: Using the data from Lab I and the Company Description, students determine standard costs for direct materials, direct labor and for applied manufacturing overhead. T.O.T.E.S. uses machine hours in the cutting department for allocating manufacturing overhead. Historical records show the cutting machines operate for 95% of the hours worked by the cutting department employees. The plant operates 50 weeks per year. The company has two cutting machines. Each machine can cut 150 totes each hour. On Exhibit 2-A, calculate the standard number of direct labor hours (DLH) per tote for each activity in Step 1; calculate the estimated cutting machine hones (MH) per tote in Step 2: calculate the estimated total machine-hours per year in Step 3; and calculate the plantwide manufacturing overhead rate in Step 4. Using this information, create a Standard Cost Card for totes in Exhibit 2-B. PART 2: Costs for each job are tracked using a Job Cost Record (Exhibit 2-C). Copies of the Materials Requisition form and Labor Time Records have been copied so that students can complete the Job Cost Record for Job #2543. Complete the Materials Requisition document to calculate total cost of materials for Job #2543. All totes were completed but not shipped at the end of the month. T.O.T.E.S. CASE STUDY - TRILLIUM All information is found in the Company Description and Information section and Lab 1. EXHIBIT 2-A: Calculate Standard Direct Labor Hours, Machine Hours & Predetermined Overhead Rate T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes DIRECT LABOR ACTIVITY STEP 1: Calculate Standard Direct Labor Hours per tote Cutting Sewing Printing a. Enter average number of hours worked per week per employee b. Number of weeks plant operates each year c. Number of employees for each activity d. Total Direct labor hours (DL.H) per year (a*b*c) e. DLH per tote (Step 1d + totes produced) Round to decimal places STEP 2: Calculate Estimated Cutting Machine-Hours (MH) per tote a. Production capacity for ONE cutting machine totes/MH b. Machine-hours per tote ( 1 + Step 2a amount) Round to & decimal places MH/tote STEP 3: Calculate Machine Hours used per year a. 95% of Total Cutting Direct-Labor Hours (from Step 1d) MH/year STEP 4: Calculate predetermined Overhead Rate (PDOHR) and Standard MOH per tote a. Total Estimated Manufacturing Overhead (from Exhibit 1-B) $ b. Total machine-hours per year (from Step 34) c. Predetermined Overhead Rate (Step 4a Step 4b) Round to decimal places MH per MH T.O.T.E.S. CASE STUDY - TRILLIUM Calculate the standard cost for each tote for the current year's production level using information from Exhibit 1-A and 1-B. Round all standard costs to four (4) decimal places. Standard Cost (cost per tote) EXHIBIT 2-8: Standard Cost Card T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes Total Cost (for 500.000 totes) DIRECT MATERIALS Fabric $ Webbing $ Total Direct Materials Cost per Tote Boond to 4 decimal places) S DIRECT LABOR Cutting $ Sewing $ Printing $ $ Total Direct Labor Cost per Tote (Round to decimal places) MANUFACTURING OVERHEAD Estimated MOH Costs (Round per tete te decimal plores) Total Product Cost per Tote (Nound to 4 decimal places $ $ $ Costs for each ob are tracloed using a Job Cost Record (Exhibit 2-0). The Job Cost Record is found after coples of the Materials Requisition form and Labor Time Records for the period. Use the information on these documents to complete the Job Cost Record for Phineas Phil's Specialty Market order of 1,000 red grocery totes with logos T.O.T.E.S. CASE STUDY - TRILLIUM Use the data from the following company documents to complete the Job Cost Record for Job #2543. Any missing data will be found in the Company Description and Information section and Lab 1. On the labor time records the employees worked on more than one job, make sure you only include the hours for Job #2543 Materials Requisition Number: # 450 Date: 5/24/20XX Job #: 2543 Quantity Unit Cost Amount Part FA223 W3 Description Red Cordura Fabric Black webbing Unit yard vard 335 1.600 Totals Labor Time Record Employee: Jacey Mayfield Week: 5/23-5/29 Hourly Wage Rate: $16.00 Record : 299 Department: Cucting Dute Job umber Start Time End Time Hours Cout 5/23 2210 8:30 13:30 5.00 $ 80.00 5/23 2518 15:30 17.00 1.50 $ 24.00 5/25 2543 7:30 12:00 4.50 $ 72.00 5/26 2543 13:00 16:30 3.50 $ 56.00 5/27 2468 13:15 17.00 3.75 $ 60.00 12 T.O.T.E.S. CASE STUDY - TRILLIUM Week: 5/24-5/30 Record #: 201 5/26 Labor Time Record Employee: John Smith Hourly Wage Rate: $16.00 Department: Sewing Date Job Number Start Time End Time Hours 2152 8.00 12.00 4.00ls 5/26 2210 13:00 17:00 4.00 $ 5/27 2518 8:00 12.00 4.00 $ 5/27 2518 13:00 17:00 4.00 $ 5/28 2543 8:00 12:00 4.00 $ 5/30 2543 8:00 10:00 2.00 $ 5/30 2468 12.00 17:00 5.00 $ Cost 64.00 64.00 64.00 64.00 64.00 32.00 80.00 Labor Time Record Employee: Tonia Springfield Week: 5/24-5/30 Hourly Wage Rate: $19.00 Record 1205 Department: Sewing Date Job Number Start Time End Time Hours Cost 5/24 2210 7:30 12.00 4.50 $ 85.50 5/23 2210 13.00 16:00 3.00 $ 57.00 5/24 2387 7:30 11:30 4.00 $ 76.00 5/24 2543 12:30 16:00 3.50 $ 66.50 5/24 2543 7:30 10:00 2.50 $ 47.50 5/24 2898 12:30 16:30 6.00 $ 114.00 Labor Time Record Week: 506-590 Record : 876 Employee: Median Hourly Wage Rates $300 Department Ring Job Number Start Time 52 End Time 1201 ESBE SISTEISIIN BIBELS Hours 40 2015 40115 25 125 Cost 400 DOD 4000 1290 13 TICE 50D TOTEK CASE STUDY-TRILLIUM T.O.T.E.S. CASE STUDY - TRILLIUM Job Number: Customer EXHIBIT 2-C: Job Cost Record for Phineas Phil's Specialty Market order Job Cost Record 2543 Phineas Phil's Specialty Market Job Description Red T.O.T.E.S. with Logo Quantity 1,000 Date Started: 5/24/20XX Date Completed: 5/30/20XX HINTS: Manufacturing Cost Information Direct Materials Requisition # Amount Total Amount Direct Labor Dept Record DUH Amount Total Amount Nemember to only record ONLY the time spent on this job Une cucing DN to colate machine hour for MON Total Amount Remember Applied MOWA deler Pedermined Owe Amount Manufacturing Overhead Quantity Machine Hours sx of Cutting DLH) Predetermined Overhead Rate ( EAS Cost Summary Direct Materials Direct Labor Manufacturing Overhead Total Product Cost Number of Units Unit Product Cort T.O.T.E.S. CASE STUDY TRILLIUM COMPANY DESCRIPTION AND OVERVIEW Tonia Odenburg and Tara Evans were life-long friends. One earned a degree in accounting and the other became a nutritionist. Both were accomplished seamstresses, were concerned about the impact plastic grocery bags had on the environment and hand created reusable grocery bags for their personal use. After numerous compliments on the design and strength of their bags from store clerks and customers, they developed a business plan and started TOTES They called their version of the grocery bag a tote and sold them to grocery stores and small community farms. The company has grown rapidly and is now operating near capacity. EMPLOYEES Tonia is the president and Tara is the controllet. Both individuals work full time and are salaried. Other employees include: Full-Time Salaried Employees: Plant manager Plant maintenance supervisor o Other administrative staff accountant, receptionist, finished goods warchouse manager) Hourly Employees: 3 employee(s) in the cutting department o 2 employee(s) in the sewing department Part-time employee who operates the machine that prints logos on the totes The hourly employees are all considered direct labor employees. Historically, the hourly employees carn an average of $20 per hour, including fringe benefits and payroll taxes. All hourly employees work 40 hours each week, except for the part-time employee who worka 20 hours each week I T.O.T.E.S. CASE STUDY - TRILLIUM MATERIALS Each grocery bag requires 1/4 yard of 60" wide fabric and 1-1/2 yards of webbing. The fabric costs $3.60 per yard. Webbing costs $0.76 per yard. Thread is purchased in 500-yard spools and is considered an indirect material. After the totes pass quality control they are silk- screened with a customer's logo and the TO.T.E.S. Iabel is attached. Both the logo ink and the company labels are indirect materials. MANUFACTURING OVERHEAD TOTES allocates manufacturing overhead using a plantwide overhead rate based on machine hours in the cutting department. The cutting machines operate 95% of the hours worked by the cutting department employees. The plant operates 50 weeks per year. INVENTORY TOTES operates on a just-in-time basis in regards to both raw materials and finished goods. Work-in-proces inventory is negligible at the end of each month. The company has found that it needs to have 20% of the following month's production requirements on hand at the end of each month in order to meet sales projections. They plan to have 5% of the fabric and 10% of the webbing required for the following month's production on hand at the end of each month. I SALE FORECAST In the upcoming year. T.O.T.E.S. management forecasted sales of 500,000 totos. Bach toto sells for 54.95. Tu estimated annual revenue and expenses based on that level of sales and production Hier estimates we shown on Ext. D48 fx =(D30-D47) B T.O.T.E.S. Operating Budget - 20XX 7 2,475,000 1,170,000 This section is for all product costs - 2 direct materials, 3 direct labor & 10 manufacturing overhead accounts. 207,500 600.000 570,000 $ 120,000 7,500 80,000 $ 4,200 7,500 38,000 14,000 26,000 32,000 68,000 42,000 27,000 50,000$ SALES REVENUES 0 COST OF GOODS SOLD COSTS (at standard) 1 Direct Materials 2 Fabric s 3. Webbing $ Direct Labor 5 Wages- Cutting department $ 6 Wages-Printing department $ 7 Wages-Sewinging department $ 3 Manufacturing Overhead Company Labels $ Depreciation Sewing Machines and cutting machines $ 1 Factory Utilities (Mixed cost) $ 2 Insurance-Plant $ 3 Logo Ink $ 3 Plant Maintance Supervisor $ 5 Plant Manager $ 5 Rent-Plant Building $ Repaires and maintenance - Plant $ Thread $ TOTAL COST OF GOODS SOLD (TOTAL PRODUCT COSTS) GROSS PROFIT SELUNG, GENERAL AND ADMINISTRATIVE COSTS Administrative Office Supplies S Administrative stoff,e.eg. Accountant ect $ Administrative Payroll and Fringe $ Advertising. Trade shows, Travel and Entertainment $ Depreciation Admin Furniture and Equipment $ Equipment lease-Administrative offices $ Excutive Salaries $ Freight and Postage- Administrative $ Insurance Company Liability $ Legal and Professional $ Rent-Administrative Building $ Sales Commissions $ Sales Solares $ Shipping and Handling of Finished product/Selling) $ + 308,800 1,686,300 788,700 $ 197,350 439,350 3,500 $ 125,000 $ 115,800 45,000 2.450 5,000 160.000 2.500 9,000 5,000 11.000 99,000 12.000 40,350 This section is for all period costs. TOTAL PERIOD COSTS OPERATING INCOME 63000 152,000 Hint: Operuting Inc S IAB 1 - OPERATING BUDGET + T.O.T.E.S. Case Study - TRILLIUM Name: JOB COSTING LAB 2 T.O.T.E.S. currently uses a job costing system to allocate costs to each job. Although their products are very similar, each customer requires a different logo on their custom tote. Furthermore, Tonia and Tara have started experimenting with different sizes and lines of product in order to expand their market. Lab 2 has three parts - calculating standard costs, allocating costs to a specific job, and recording the flow of costs for that job. PART 1: Using the data from Lab I and the Company Description, students determine standard costs for direct materials, direct labor and for applied manufacturing overhead. T.O.T.E.S. uses machine hours in the cutting department for allocating manufacturing overhead. Historical records show the cutting machines operate for 95% of the hours worked by the cutting department employees. The plant operates 50 weeks per year. The company has two cutting machines. Each machine can cut 150 totes each hour. On Exhibit 2-A, calculate the standard number of direct labor hours (DLH) per tote for each activity in Step 1; calculate the estimated cutting machine hones (MH) per tote in Step 2: calculate the estimated total machine-hours per year in Step 3; and calculate the plantwide manufacturing overhead rate in Step 4. Using this information, create a Standard Cost Card for totes in Exhibit 2-B. PART 2: Costs for each job are tracked using a Job Cost Record (Exhibit 2-C). Copies of the Materials Requisition form and Labor Time Records have been copied so that students can complete the Job Cost Record for Job #2543. Complete the Materials Requisition document to calculate total cost of materials for Job #2543. All totes were completed but not shipped at the end of the month. T.O.T.E.S. CASE STUDY - TRILLIUM All information is found in the Company Description and Information section and Lab 1. EXHIBIT 2-A: Calculate Standard Direct Labor Hours, Machine Hours & Predetermined Overhead Rate T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes DIRECT LABOR ACTIVITY STEP 1: Calculate Standard Direct Labor Hours per tote Cutting Sewing Printing a. Enter average number of hours worked per week per employee b. Number of weeks plant operates each year c. Number of employees for each activity d. Total Direct labor hours (DL.H) per year (a*b*c) e. DLH per tote (Step 1d + totes produced) Round to decimal places STEP 2: Calculate Estimated Cutting Machine-Hours (MH) per tote a. Production capacity for ONE cutting machine totes/MH b. Machine-hours per tote ( 1 + Step 2a amount) Round to & decimal places MH/tote STEP 3: Calculate Machine Hours used per year a. 95% of Total Cutting Direct-Labor Hours (from Step 1d) MH/year STEP 4: Calculate predetermined Overhead Rate (PDOHR) and Standard MOH per tote a. Total Estimated Manufacturing Overhead (from Exhibit 1-B) $ b. Total machine-hours per year (from Step 34) c. Predetermined Overhead Rate (Step 4a Step 4b) Round to decimal places MH per MH T.O.T.E.S. CASE STUDY - TRILLIUM Calculate the standard cost for each tote for the current year's production level using information from Exhibit 1-A and 1-B. Round all standard costs to four (4) decimal places. Standard Cost (cost per tote) EXHIBIT 2-8: Standard Cost Card T.O.T.E.S. CALCULATING STANDARD COSTS Forecasted Production per year 500,000 totes Total Cost (for 500.000 totes) DIRECT MATERIALS Fabric $ Webbing $ Total Direct Materials Cost per Tote Boond to 4 decimal places) S DIRECT LABOR Cutting $ Sewing $ Printing $ $ Total Direct Labor Cost per Tote (Round to decimal places) MANUFACTURING OVERHEAD Estimated MOH Costs (Round per tete te decimal plores) Total Product Cost per Tote (Nound to 4 decimal places $ $ $ Costs for each ob are tracloed using a Job Cost Record (Exhibit 2-0). The Job Cost Record is found after coples of the Materials Requisition form and Labor Time Records for the period. Use the information on these documents to complete the Job Cost Record for Phineas Phil's Specialty Market order of 1,000 red grocery totes with logos T.O.T.E.S. CASE STUDY - TRILLIUM Use the data from the following company documents to complete the Job Cost Record for Job #2543. Any missing data will be found in the Company Description and Information section and Lab 1. On the labor time records the employees worked on more than one job, make sure you only include the hours for Job #2543 Materials Requisition Number: # 450 Date: 5/24/20XX Job #: 2543 Quantity Unit Cost Amount Part FA223 W3 Description Red Cordura Fabric Black webbing Unit yard vard 335 1.600 Totals Labor Time Record Employee: Jacey Mayfield Week: 5/23-5/29 Hourly Wage Rate: $16.00 Record : 299 Department: Cucting Dute Job umber Start Time End Time Hours Cout 5/23 2210 8:30 13:30 5.00 $ 80.00 5/23 2518 15:30 17.00 1.50 $ 24.00 5/25 2543 7:30 12:00 4.50 $ 72.00 5/26 2543 13:00 16:30 3.50 $ 56.00 5/27 2468 13:15 17.00 3.75 $ 60.00 12 T.O.T.E.S. CASE STUDY - TRILLIUM Week: 5/24-5/30 Record #: 201 5/26 Labor Time Record Employee: John Smith Hourly Wage Rate: $16.00 Department: Sewing Date Job Number Start Time End Time Hours 2152 8.00 12.00 4.00ls 5/26 2210 13:00 17:00 4.00 $ 5/27 2518 8:00 12.00 4.00 $ 5/27 2518 13:00 17:00 4.00 $ 5/28 2543 8:00 12:00 4.00 $ 5/30 2543 8:00 10:00 2.00 $ 5/30 2468 12.00 17:00 5.00 $ Cost 64.00 64.00 64.00 64.00 64.00 32.00 80.00 Labor Time Record Employee: Tonia Springfield Week: 5/24-5/30 Hourly Wage Rate: $19.00 Record 1205 Department: Sewing Date Job Number Start Time End Time Hours Cost 5/24 2210 7:30 12.00 4.50 $ 85.50 5/23 2210 13.00 16:00 3.00 $ 57.00 5/24 2387 7:30 11:30 4.00 $ 76.00 5/24 2543 12:30 16:00 3.50 $ 66.50 5/24 2543 7:30 10:00 2.50 $ 47.50 5/24 2898 12:30 16:30 6.00 $ 114.00 Labor Time Record Week: 506-590 Record : 876 Employee: Median Hourly Wage Rates $300 Department Ring Job Number Start Time 52 End Time 1201 ESBE SISTEISIIN BIBELS Hours 40 2015 40115 25 125 Cost 400 DOD 4000 1290 13 TICE 50D TOTEK CASE STUDY-TRILLIUM T.O.T.E.S. CASE STUDY - TRILLIUM Job Number: Customer EXHIBIT 2-C: Job Cost Record for Phineas Phil's Specialty Market order Job Cost Record 2543 Phineas Phil's Specialty Market Job Description Red T.O.T.E.S. with Logo Quantity 1,000 Date Started: 5/24/20XX Date Completed: 5/30/20XX HINTS: Manufacturing Cost Information Direct Materials Requisition # Amount Total Amount Direct Labor Dept Record DUH Amount Total Amount Nemember to only record ONLY the time spent on this job Une cucing DN to colate machine hour for MON Total Amount Remember Applied MOWA deler Pedermined Owe Amount Manufacturing Overhead Quantity Machine Hours sx of Cutting DLH) Predetermined Overhead Rate ( EAS Cost Summary Direct Materials Direct Labor Manufacturing Overhead Total Product Cost Number of Units Unit Product Cort