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UNIVERSIDAD DE CIENCIAS COMERCIALES 1 CASO DE COSTO I The Waverly Manufacturing Company has decided to change the method of distribution of factory overload among
UNIVERSIDAD DE CIENCIAS COMERCIALES 1 CASO DE COSTO I The Waverly Manufacturing Company has decided to change the method of distribution of factory overload among its products, all of which are manufactured on special order. It is requested that a) calculate appropriate departmental fees, based on the company's operations during the first half of 1948, and b) explain their use, determining the cost of Work Order No 987 by applying the rates calculated. The check balance of the company's largest factory, for the semester ended on June 30, 1948, omitting pennies, is as follows: MUST HABER Materials and Manufacturing Supplies.... $85,321.00 Work in Progress, Material 86,105.00 I work in Process, Manpower........... 82,872.00 I work in Process, Manufacturing Expenses... 161,480.00 Indirect Labour........... 41,740.00 Renta de la Fbrica.......... 2,400.00 Insurance, machinery and equipment. 4,216.00 Insurance for information purposes. 2,486.00 Superintendence........... 6,000.00 Salaries of Factory Clerks........... 4,950.00 Maintenance and Repairs of Machinery... 31,010.00 Depreciation of machinery and equipment. 42,800.00 Combustible........ 3,172.00 Electricidad.... 2,178.00 Completed Manufacturing Supplies 3,617.00 Insurance Taxes Social....... 9,210.00 Office materials of the European Communities 879.00 Diversos Gastos de Fbrica................ 1,212.00 Manufacturing costs. 158,200.00 Control of the Major General... 413.448.00 Equal sums...... $571,648.00 $571,648.00 Lic. Guillermo Reynosa Gmez (CPA-2267) UNIVERSIDAD DE CIENCIAS COMERCIALES 2 CASO DE COSTO I Additional data Manufacturing operations take place in three production departments, A, B and C, with the help of two service departments numbered 1 and 2 respectively. Other information: Departments Total A B 1 2 Floor space on the floor 30,000 10,000 5,000 2,000 7,500 5,500 Ft Ft Ft Ft Ft Ft2 Number of workers 109 50 20 4 25 10 Number of hours of labor 113,360 52,000 20,800 4,160 26,000 10,400 Number of machine hours 47,952 31,912 9,640 560 5,840 Salaries and Wages Cost of machinery and equipment 1,019,047.00 161,317.00 76,180.00 28,472.00 9,975.00 37,230,00 9,460.00 623,225.00 250,960.00 20,210.00 112,862.00 11,790.00 Annual rates of depreciation 8% 8% 10% 10% 20% Ft: Square Foot When calculating overload rates, undistributed expenditures in this table should be distributed among departments as follows: Based on the floor space: Renta de la fbrica; fuel; of electricity Based on salaries and wages: Compensation insurance Superintendence Manufacturing supplies used Social Security Material de oficina de fbrica Diversos gastos de fbrica Based on investment in machinery and equipment: Insurance for machinery and equipment Maintenance and repair of machinery of electricity. Factory clerks' salaries and $4,500.00 of Indirect Labor are charged to Department 2. The balance Lic. Guillermo Reynosa Gmez (CPA-2267) UNIVERSIDAD DE CIENCIAS COMERCIALES 3 CASO DE COSTOI of indirect labour is charged to Department 1. The costs of Department No 1 are to be distributed, one tenth to Department No 2, and the rest to all other departments based on machine hours. The costs of Department 2 are to be distributed between Departments A, B and C on the basis of working hours. Departmental overload rates should be based on machine hours for Departments A and B, and on labour hours for Department C. The data for Work Order 987 are as follows. Material Manpower $487.92 $465.00 Machine hours: Departamento A 50 Departamento B 12 Hours of Labor: Departamento C 20 Lic. Guillermo Reynosa Gmez (CPA-2267)
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