Homework: Essentials of Managerial Accounting
Part I
Provide the journal entry used to record each of the following transactions:
o Raw materials totaling $35,000 are purchased on account.
o Direct materials totaling $4,000 are requisitioned and placed into production.
o Timesheets submitted by employees reflect direct labor costs of $1,500, to be paid the next week.
o Which of the previously stated entries must also be recorded on the appropriate job cost sheet? Why?
Part II
Kline Company expects to incur $600,000 in overhead costs this coming year-$100,000 in the Cut and Polish department and $500,000 in the Quality Control department. Total annual direct labor costs are expected to be $120,000. The Cut and Polish department expects to use 18,750 machine hours, and the Quality Control department plans to use 37,500 hours of direct labor time for the year.
Task:
o Assume that Kline Company allocates overhead costs with the plant-wide approach, and direct labor cost is the allocation base. Calculate the rate used by the company to allocate overhead costs.
o Assume that Kline Company allocates overhead costs with the department approach. Calculate the rate used by each department to allocate overhead costs.
Part III
In a 2 to 3 pages journal, consider activity-based costing (ABC) management within a manufacturing firm. Describe the purpose and extent of activity-based costing. Within the analysis explain the five steps used in activity-based costing to determine costs.
o Be sure to provide an example from your company or from one that you are familiar with that illustrates its use in allocating costs.
o Conclude your journal by contrasting ABC with job costing.
o Provide at least two scholarly sources.
Format your homework according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.