3 4 PART 4 6 Process Costing - Weighted Average 7 8 General Information 9 10. The I See The Light Company has a related

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3 4 PART 4 6 Process Costing - Weighted Average 7 8 General Information 9 10. The I See The Light Company has a related company that produces the figurines. They use process costing 14. in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars. 15 The material is added at the beginning of the process. The labor and overhead costs are assumed 16 to be added uniformly throughout. 17 18 22 23 24 25 Month of January 26 30 Selected information for January is presented below. Note that the applied overhead rate was 31 50% of direct labor costs in the molding department 32 33 34. Molding Department 38 39 Goods in-process as of January 1 were 3,700 figurines at a cost of $61,959.00 of this amount, $5,994.00 was from 40 raw materials added, $37,310.00 for labor and 518,655.00 for overhead. These 3,700 figurines were assumed to be 41 70.00% complete as to labor and overhead 42 46 During January, 20,000 units were started, 539,744.00 of materials and $29,717.50 of labor costs were incurred, 47 48 The 8,500 figurines that were in process at the end of January wore assumed to be 25,00% complete to 49 labor and overhead 50 54 Al figurines in January passed inspection 55 56
F G G H 2 B D E 17 8 MOLDING 9 10 Physical Flow of Units 11 16 Work-in-process. Beginning 17 Units Started this Period 18 Units to Account for 19 20 Total transferred out 25 Work-In-Process - Ending 26 Total Accounted for 27 28 29 34 Equivalent Units Material (Round to two places, ####### 35 38 37 Equivalent Units Conversion Round to two places, #####.) 38 (12.01) (12.02) (12.03) (12.04) {12.05) (12.06) {12.07) 44 45 Total cost of Material (Round to two places, ##.###.## 46 47 52 Total cost of Conversion (Round to two places, ##.#. 53 Total cost to account for (Round to two places, ##.###.) 54 55 56 61 Cost per equivalent unit of Material (Round to two places that 62 63 34 Cost per equivalent unit of Conversion (Round to two places, ...) 65 70 71 72 73 (12.08) (12.09) Cost of the ending Inventory material and convesion (Round to two places. SWAM (12.10) wErmu昭昭的www 79 80 81 82 83 BO Coat of the units transferred material and convesion (Round to two places, S. 90 91 92 93 94 (12.11)
10 11 12 To keep records of the actual cost of a special order job, a Job Order Cost System has been developed. 78 Overhead is applied at the rate of 50% of the direct labor cost, 19 20 21 22 Job Order Costing Section 28 29 on January 1, 20x2. Division S began Job 2407 for the Clent, THE BIG CHILDREN STORE. The 30 job called for 4,000 customized lamps. The following set of transactions occurred from 31 January 5 until the job was completed: 32 38 5 Jan Purchased 4,200 Lamp Kits @ $16.45 per kit. 39 9-Jan 4,125 sets of Lamp Kits were requisitioned. 40 17-Jan Payroll of 590 Direct Labor Hours @ $9.40 per hour. 41 30-Jan Payroll of 640 Direct Labor Hours @ $9.65 per hour. 30-Jan 3,990 lamps were completed and shipped. All materials requisitioned were 48 used or scrapped, and are a cost of normal processing. Month End Overhead Information 51 Actual Variable Manufacturing Overhead $ 1.254.60 52 Actual Fixed Manufacturing Overhead $ 40,123.45 58 42 49 50 59 60 61 62 08 Round to two places S. 69 70 71 72 Cost of Direct Material incurred in Manufacturing Job 2407 (13.01) 郎和。肌mm的ww Cost of Direct Labor Incurred in Manufacturing Job 2407 III (13.02) 79 80 81 82 88 89 90 91 92 90 99 100 101 102 103 104 105 106 107 100 109 Cost of Manufacturing Overhead Applied to Job 2407 (13.03) Cost of manufacturing one lamp (13.04)
1 2 Special order lamps are manufactured in division S. Because of the precise nature of the process a 3 standard cost system has been developed. The following standards are used for the special orders: 20 21 22 23 Standards 24 Lamp Kits $16.000000 per lamp 31 Direct Labor 2.400000 per lamp (4 lamps/hr.) 32 Variable Overhead 0.250000 per lamp (4 lamps/hr.) 33 ** Fixed Overhead 10.000000 per lamp 34 Total $ 28.650000 35 42 ** Fixed overhead is based on expected production of 4,008 customized lamps each month. 43 44 To keep records of the actual cost of a job, a Job Order Cost System has been developed. Entries 45 are made to the Job Order System at actual cost (overhead is applied based on actual labor hours) 46 while entries are made to the accounting system at standard. Variance analysis is used to analyze the 53 differences 54 55 56 57 Job Order Costing Section 65 On January 1, 20x2. Division S began Job 1101 for the client, THE BIG CHILDREN STORE. The 66 job called for 4,000 customized lamps. The following set of transactions occurred from 67 January 5 until the job was completed: 84 68 5-Jan Purchased 4,200 Lamp Kits @ $16.45 per kit 9-Jan 4,125 sets of Lamp Kits were requisitioned. 17-Jan Payroll of 590 Direct Labor Hours @ $9.40 per hour. 30-Jan Payroll of 640 Direct Labor Hours @ $9.65 per hour. 30-Jan 3,992 lamps were completed and shipped. All materials requisitioned were used or scrapped 75 76 77 78 79 86 87 ВВ 89 90 97 98 99 100 101 108 109 110 111 112 Month End Overhead Information Actual Variable Overhead Actual Fixed Overhead $ 1,254,60 $ 40,123.45 6 7 D 10 11 Ready
3 4 12 13 14 How many Lamps were completed? 15 16. Note: Show favorable variances as negative numbers 24 Round dollars to two places $#### (15.01) 25 20 27 2. What was the total material proe variance for the Lamp Kits purchased? 36 37 38 30 What was the material usage variance for Lamp Kits? 40 48 49 50 51 (15.02) (15.03) 60 What was the direct labor ciency variance ? 61 52 83 64. What was the direct labor rate variance? 72 73 (15.04)
14 Note: Show favorabie variances as negative numbers 15 16 17 18 27 28 29 30 What was the variable overhead officiency variance ? (16.01) 31 40 41 42 43 What was the variable Oh spending variance ? (16.02) 44 53 54 55 56 57 06 67 GB 69 What in the fixed OH volume (denominator) variance? (16:03) 70 70 BO 81 82 92 93 What is the foxed OH spending variance? 04 95 (16.04) 105
PART 7 {17.01) (17.02) Capital Decision Making 6 17 18 Big Al gives his worker's a one hour lunch and two fifteen minute breaks oach day. He believes that a 19 cold soda machine would be appreciated by his workers, and an appreciated worker is a good worker. 20. He has priced a machine at a national member only warehouse for $2,100. The machine should be 30 usable for 3 years after which it would be inefficient, obsolete and would have to be disposed of at the 31 dump. Big Al believes that 8 cans a day will be purchased. The plant is open five days a week. 50 32 weeks per year. A case of soda (24 cans) costs $6.24 and Big Al believes that a price of $ 80 per 33 can would win him good wil. 34 What is the estimated annual sales in cans of soda? 45 46 47 48 What is the contribution margin per can of soda? (rounded to two places, $### 58 59 50 81 62 72 How many cans of soda must be sold each year to broakoven? (Round up to zero places, ####** cans) 73 74 75 178 86 B7 Annual incremental cash inflows from the soda machine? (rounded to two places SMMM 88 89 200 100 101 102 103 104 What is the payback period in years? (rounded to two places, W. years) 114 115 116 117 118 128 129 (17.03) (17.04) (17.05) 11