Task 1-
The following information is available for Deutsch Corporation for 2010:
|
Inventorlos January 1
|
December 31
|
| Materials $225.000 |
5280.000 |
|
Work in process 405.000
|
380.000
|
|
Finished goods 390.000
|
390.000
|
|
Advenising expense
|
190.000
|
|
Depredation expense-office abutment
|
27.000
|
|
Depredation expense-factory equipment
|
36.000
|
|
Direct labor
|
430.000
|
|
Heat light, and power-factory
|
14,400
|
|
[Direct labor
|
50.400
|
|
Materials purchased
|
423,000
|
|
Office salaries expense
|
147,500
|
|
Property taxes-factory
|
11,700
|
|
Property taxes-office building
|
24,300
|
|
Rent expense-factory
|
19.800
|
|
Sales
|
1.990.000
|
|
Sales salaries expense
|
243.000
|
|
Supplies-factory
|
9.900
|
|
Miscellaneous cost-factory
|
6.120
|
Instructions
1. Prepare the 2010 statement of cost of goods manufactured.
2. Prepare the 2010 income statement.
Task 2-
If the working papers correlating with the textbook are not used, omit Problem 2-313.
Terry Furniture Company refinishes and reupholsters furniture. Terry uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On June I, 2010, an estimate of $1,087.80 for reupholstering two chairs and a couch was given to Ted Austin. The estimate was based on the following data:
Estimated direct matenals:
24 Meters at 514 per Mater ...................................................... 336.00
Estimated direct labor
14 hours at $18 per hour ........................................................ 25200
Estimated factory overhead 175% of direct labor cost)................ 189.00
Total estimated costs .............................................................. $ 777.00
Markup 140% of production costs)............................................ 310.80
Total estimate ....................................................................... $1 ,087.80
On June 4, the chairs and couch were picked up from the residence of Ted Austin, 409 Patterson St., Vienna, with a commitment to return them on August 5. The job was completed on August 2.
The related materials requisitions and time tickets are summarized as follows:
|
Materials Requisition No.
|
Description
|
Amount
|
|
210
|
10 meters at $14
|
$140
|
|
212
|
16 meters at $14
|
224
|
|
Time Ticket No.
|
Description
|
Amount
|
|
H16
|
6 hours at $18
|
$108
|
|
H21
|
10 hours at $14
|
180
|
Instructions
1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.
2. a- Assign number 10-110 to the job, record the costs incurred, and complete the job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that two meters of materials were spoiled, the factory overhead rate has been proved to be satisfactory, and an inexperienced employee performed the work.
Task 3-
Gwinnett Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
|
Activity
|
Activity Cost Pool
|
|
Production
|
$ 495000
|
|
Setup
|
225,000
|
|
Moving
|
29,750
|
|
Shipping
|
126.000
|
|
Product engineering
|
150.000
|
|
Total
|
51.025.750
|
The activity bases identified for each activity are as follows:
|
Activity
|
Activity Base
|
|
Production
|
Machine hours
|
|
Setup
|
Number of setups
|
|
Moving
|
Number of moves
|
|
Shipping
|
Number of customer orders
|
|
Product engineering
|
Number of test runs
|
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
|
Machine hours
|
Number of setups
|
Number of moves
|
Number of customer orders
|
Number of test runs
|
Units
|
|
Computer paper
|
900
|
130
|
290
|
440
|
90
|
1.000
|
|
Newsprint
|
1.125
|
60
|
130
|
135
|
20
|
1.250
|
|
Specialty paper
|
450
|
310
|
430
|
625
|
140
|
500
|
|
Total
|
2.475
|
500
|
650
|
1200 in.
|
250
|
2.750
|
Each product requires 0.9 machine hour per unit.
Instructions
1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity cost for all three products.
3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit?