Week 4 assignment — p 4-4 p4-5 p4-10 week 4 assignment

Week 4 Assignment

P 4-4 P4-5  P4-10 Week 4 Assignment

P 4-4 Listed below are the budgeted factory overhead costs for 2011 for Muncie Manufacturing, Inc.., at the projected level of 2,000 units:

EXPENSES:

indirect materials………………………………………..$ 10,000

Indirect labor……………………………………………… 20,000

Power………………………………………………………. 15,000

Straight-line depreciation………………………………. 30,000

Factory property Tax……………………………………. 28,000

Factory Insurance……………………………………….. 12,000

Total…………………………………………………………..$115,000

Required:

Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)

P4-5 Cake Products Inc, is divided into five departments, mixing, blending, finishing, factory office and building maintenance. The first three departments are engaged in production work. Factory Office and Building Maintenance are service departments. During the month of June, the following factory overhead was incurred for the various departments:             

mixing   $21,000                       factory office $9,000

Blending  $18,000                    building maintenance $6,400

finishing  $25,000 

The bases for distributing service department expenses to the other departments follow:

Building maintenance – on the basis of floor space occupied by the other departments as follows: mixing 10,000 sqft, blending $4,500 sqft, finishing 10,500 sqft and factory office 7,000 sq ft.

Factory office – on the basis of number of employees as follows : mixing 30, blending 20 and finishing 50 Prepare schedules showing the distribution of the service departments expenses for the following:

1. The direct distribution method                 

2. The sequential distribution method in the order of number of other departments served.

P4-10 Con-Aggie Manufacturing Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead: $60,000; estimated materials costs, $50,000; estimated direct labor costs $60,000; estimated direct labor hours 10,000; estimated machine hours 20,000; work in process at the beginning of the month, none.

 The actual factory overhead incurred for the month of November was $75,000, and the production statistics on November 30 are as follows:

Job Materials Cost Direct Labor Costs Direct Labor Hours Machine Hours Date Jobs Completed

101        5,000                6,000                1000                 3,000              10-Nov

102        7,000                12,000  2,000 3,200 14-Nov

103     8,000 13,500 2,500                4,000                20-Nov

104       9,000                15,600 2,600 3,400                Inprocess

105        10,000              29,000 4,500                6,500                26-Nov

106        11,000              2,400 400                   1,500                In process

Total      50,000              78,500 13,000 21,600

Required:

1. Compute the predetermined rate, based on the following:

a. direct labor cost,

b. direct labor hours,

c. machine hours.                                                                                    

2. Using each of the methods, compute the estimated total cost of each job at the end of the month.                                                                               

3. Determine the under- or overapplied factory overhead, in total, at the end of the month under each of the methods.

4. Which method would you recommend, and why?