Fabila Company specializes in manufacturing a unique model of bicycle helmet.
1) Fabila Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by customers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Fabila’s company manufacturing cost and other expense data are as follows:
Rent on factory equipment $7,000
Insurance on factory building 1,500
Raw materials (plastics, polustyrene, etc.) 75,000
Utility costs for factory 900
Supplies for general office 300
Wages for assembly line workers 43,000
Depreciation on office equipment 800
Misc materials (glue, thread, etc.) 1,100
Factory manager’s salary 5,700
Property taxes on factory building 400
Advertising for helmets 14,000
Sales commissions 7,000
Depreciation on factory building 1,500
a) Prepare an answer sheet with the following column headings.
Direct Materials (75,000)
Direct Labor (43,000)
Manufacturing Overhead (18,100)
Period Costs (22,100)
Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.
b) Compute the cost to produce one helmet.
2) Hsung Manufacturing Company uses a job order cost system in each of its three manufacturing depts. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Dept E, direct labor hours in Dept G and machine hours in Dept I.
In establishing the predetermined overhead rates for 2012, the following estimates were made for each year.
E G I
Manufacturing overhead 1,050,000 1,500,000 840,000
Direct Labor costs 1,500,000 1,250,000 450,000
Direct Labor hours 100,000 125,000 40,000
Machine hours 400,000 500,000 120,000
During January, the job cost sheets showed the following costs and production data.
E G I
Direct Material used 140,000 126,000 78,000
Direct Labor costs 120,000 110,000 37,000
Manufacturing overhead 89,000 124,000 74,000
Direct Labor hrs 8,000 11,000 3,500
Machine hours 34,000 45,000 10,400
a) Compute the predetermined overhead rate for each dept
b)Compute the total manufacturing costs assigned to jobs in Jan in each dept
c) Compute the under -or over applied overhead for each dept at Jan 31.
3) Chakos Industries Inc manufactures in separate processes furniture homes. In each process, materials entered are the beginning, and conversion costs are incurred informly. Production and cost data for the first process in making two products in two diff manufacturing plants are as follows:
Production – July /Plant 1 T12 Tables /Plant 2 C10chairs
Work in process units 7/1 -0- -0-
Units started 20,000 16,000
Work in process 7/31 3,000 500
Work in process complete 60 80
Cost data July
Work in process 7/1 -0- -0-
Material 380,000 288,000
Labor 234,000 125,900
Overhead 104,000 96,700
Total 718,400 510,600
a) For each plant:
1) Compute the physical units of production
2) Compute equivalent units of production for materials and conversion costs
3) Determine the unit cost of production
4) Show the assignment of costs to units transferred out and in process
b) Prepare the production cost report for Plant 1 for July 2012.