Calwell Corp. uses a job order costing system.

Calwell Corp. uses a job order costing system..

Order costing system

Exercise 1

Calwell Corp. uses a job order costing system. Four jobs were started during the current year. The following is a record of the costs incurred:

 

Job # Material

Used

Direct Labor

Used

Direct Labor

Hours Used

1010 $45,000 $72,000 8,000
1011 59,000 77,000 7,000
1012 35,000 30,000 3,000
1013 26,000 40,000 5,000

 

Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013 were sold for $387,000. Assuming that this is Calwell’s first year of operations:

 

(a) Make the necessary journal entries to charge the costs to the jobs started and to record the completion and sale of finished jobs.

(b) Calculate the balance in the Work in Process Inventory, Finished Goods Inventory, and Factory Overhead accounts. Does the Factory Overhead account balance indicate an over- or underapplied overhead?

 

Exercise 2

Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing.

 

Beginning Work in Process inventory:

Physical units……………………………………………          5,000 units

% complete for materials……………………………….             70%

% complete for labor and overhead…………………….             25%

Materials cost from May………………………………..         $7,350

Labor and overhead cost from May…………………….              $3,125

Product started and completed:

Physical units……………………………………………              40,000 units

Ending Work in Process inventory:

Physical units…………………………………………….          4,000 units

% complete for materials……………………………….              40%

% complete for labor and overhead    …………………….                 10%

Manufacturing costs for June:

Materials…………………………………………………        $96,975

Labor and overhead………………………………………             $79,470

 

Compute equivalent units for direct materials, direct labor and overhead for June.

 

Exercise 3

Fischer Company identified the following activities, costs, and activity drivers:

 

Activity Expected Costs Expected Activity
Handling parts $425,000 25,000 parts in stock
Inspecting product $390,000 940 batches
Processing purchase orders $220,000 440 orders
Designing packaging $230,000 5 models

 

  1. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).
  2. Compute separate rates for each of the four activities using the activity-based costing.

 

Exercises 4

 

Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below.

 

 

Freeze Frame’s total expected overhead costs and related overhead data are shown below:

 

 

  1. Compute a departmental overhead rate for department A based on direct labor hours.
  2. How much overhead is associated with model 789 from department A?
  3. Compute a departmental overhead rate for department B based on direct labor hours.
  4. How much overhead is associated with model 789 from department B?
  5. Compute a departmental overhead rate for department C based on direct labor hours.
  6. How much overhead is associated with model 789 from department C?
  7. What is the per unit cost of the 550,000 units of model 789?

Exercise 5

Magnolia Company is considering the production and sale of a new product with the following sales and cost data: unit sales price, $350; unit variable costs, $180; total fixed costs, $399,500; and projected sales, $910,000. Round your answers to the nearest whole unit or dollar.

(a) Calculate break-even in units.

(b) Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).

(c) Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.

(d) Calculate dollar sales that would be needed to generate the same profit as above.

(e) Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.

Be sure to label each calculation and show all calculations.

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Calwell Corp. uses a job order costing system.

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