MOS 3370A Section 650, Summer 2016

MOS 3370A Section 650, Summer 2016Second Hand in Due Friday, May 20, MidnightQuestion 1Job CostingLinus Manufacturing has three Departments. The estimated manufacturing Overheadcosts for 2015 were:Dept ADept BDeptTotalEst OH$ 10,000 $ 40,000 $30,000 $80,000Est Lab$ 40,000 $ 20,000 $60,000 $120,000Actual Manufacturing and Labour costs were:Act OH$ 12,000 $ 36,000 $39,000 $Act Lab$ 44,000 $ 19,000 $72,000 $87,000135,000The Overhead rate is determined at the beginning of each year based on estimatedOverhead costs. The rate is based on estimated Labour costs. Overhead is then appliedto individual jobs based on the labour cost of each job.Job 101 had actual material costs of $1,500 and labour costs of $630 (Dept A = $200,Dept B = $190, Dept C = $240)Required: What is the full cost of Job 101?Should the cost of Job 101 be based on a single Overhead rate or onebased on individual Department rates…discuss.Using a T account, show how much Overhead was under/over appliedin 2015.Question 2Process CostingHair to Glow manufactures a miraculous beauty product. They currently usea weighted average process costing system. During April, 125,000 combs weresold. They have only one department.Percent completeApril 1 Inventory:Material Conversion50%25%Work in Process80,000 units$76,600 $34,900April 30 Inventory:Work in Process8,000 unitsStarted Into Production300,000 units45%20%Transferred to Finished GoodsMaterial Costs added in AprilConversion Costs added in April320,000 units$410,000$234,500Required: get a cost per equivalent unit and put a value on ending WIP andunits transferred FG. DO BOTH weighted average and FIFO. Are costs increasingor decreasing. Use Work sheet below.WEIGHTED AVERAGEStep 1Step 3WIP in Units% MatWIP in Dollars% ConMatBegStartedBegStartedEndingConEndingStep 2Equivalent Units of inputs:Transferred outEndingWAEUMatConFIFOFIFOStep 1Step 3WIP in Units% MatWIP in Dollars% ConMatBegStartedBegStartedEndingEndingStep 2Equivalent Units of inputs:* Transferred outEndingWAEU** Less Beg WorkFIFO EUMatConConQuestion 3Activity Based CostingSample Company uses full absorption costing with an overheadrate based on direct labour hours. Sample has estimated itsmanufacturing overhead and direct labour hours for the year at$176,000 and 20,000 hours respectively. The company is currentlysubmitting a bid for a job that would use $2,200 of material and400 labour hours @$11.00 an hour. Bids are based on full cost.The company is considering using Activity Based Costing for bidding purposes.They have estimated the following:TotalActivity Cost PoolCostsActivity MeasuresMeasuresInspection$ 43,000 # inspections1,000Maintenance$ 96,000 Machine hours5,000Material Handling$ 19,000 Material moves500Setup$ 18,000 # setups200$ 176,000The above job uses 15 inspections, 40 machine hours, 20 material moves and5 setups.What would the bid be under absorption costing?What would the bid be under ABC?Discuss