Question 1: How does a job- costing system differ from a process- costing system?
Question 2: Job costing, process costing. In each of the following situations, determine whether job costing or process costing would be more appropriate.
a. A CPA firm l. A landscaping company
b. An oil refinery m. A cola- drink- concentrate producer
c. A custom furniture manufacturer n. A movie studio
d. A tire manufacturer o. A law firm
e. A textbook publisher p. A commercial aircraft manufacturer
f. A pharmaceutical company q. A management consulting firm
g. An advertising agency r. A breakfast- cereal company
h. An apparel manufacturing plant s. A catering service
i. A flour mill t. A paper mill
j. A paint manufacturer u. An auto repair shop
k. A medical care facility
Question 3: Budgeted manufacturing overhead rate, allocated manufacturing overhead. Waheed Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine- hour. The following data are available for 2008:
Budgeted manufacturing overhead costs $ 4,000,000
machine- hours 200,000
Actual manufacturing overhead costs $ 3,860,000
Actual machine- hours 195,000
Required
1. Calculate the budgeted manufacturing overhead rate.
2. Calculate the manufacturing overhead allocated during 2008.
3. Calculate the amount of under- or overallocated manufacturing overhead.
Question 4: Job costing, accounting for manufacturing overhead, budgeted rates. The Lynn Company uses a job- costing system at its Minneapolis plant. The plant has a Machining Department and an Assembly Department. Its job- costing system has two direct- cost categories ( direct materials and direct manufactur-ing labor) and two manufacturing overhead cost pools ( the Machining Department overhead, allocated to jobs based on actual machine- hours, and the Assembly Department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2009 budget for the plant is:
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Machining Department
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Assembly Department
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|
Manufacturing overhead
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$ 1,800,000
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$ 3,600,000
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|
Direct manufacturing labor costs
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$ 1,400,000
|
$ 2,000,000
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|
Direct manufacturing labor- hours
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100,000
|
200,000
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|
Machine- hours
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50,000
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200,000
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Required
1. Present an overview diagram of Lynn’s job- costing system. Compute the budgeted manufacturing over-head rate for each department.
2. During February, the job- cost record for Job 494 contained the following:
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Machining Department
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Assembly Department
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|
Manufacturing overhead
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$ 45,000
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$ 70,000
|
|
Direct manufacturing labor costs
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$ 14,000
|
$ 15,000
|
|
Direct manufacturing labor- hours
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1,000
|
1,500
|
|
Machine- hours
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2,000
|
1,000
|
Compute the total manufacturing overhead costs allocated to Job 494.
3. At the end of 2009, the actual manufacturing overhead costs were $ 2,100,000 in Machining and $ 3,700,000 in Assembly. Assume that 55,000 actual machine- hours were used in Machining and that actual direct manufacturing labor costs in Assembly were $ 2,200,000. Compute the over- or underallocated manufacturing overhead for each department.
Question 5: Job costing, consulting firm. Taylor & Associates, a consulting firm, has the following condensed budget for 2009:
Revenues $ 20,000,000
Total costs:
Direct costs
Professional Labor $ 5,000,000
Indirect costs
Client support 13,000,000 18,000,000
Operating income 2,000,000
Taylor has a single direct- cost category ( professional labor) and a single indirect- cost pool (client support). Indirect costs are allocated to jobs on the basis of professional labor costs.
Required
1. Prepare an overview diagram of the job- costing system. Compute the 2009 budgeted indirect- cost rate for Taylor & Associates.
2. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Compute the markup rate as a percentage of professional labor costs.
3. Taylor is bidding on a consulting job for Red Rooster, a fast- food chain specializing in poultry meats. The budgeted breakdown of professional labor on the job is as follows:
Professional Labor Category Budgeted Rate per Hour Budgeted Hours Director
Director $ 200 3
Partner 100 16
Associate 50 40
Assistant 30 160
Compute the budgeted cost of the Red Rooster job. How much will Taylor bid for the job if it is to earn its target operating income of 10% of revenues?