INTRO MANAGERIAL ACCT
INTRO MANAGERIAL ACCT ACG 2071
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This 9 page Class Notes was uploaded by Mathew Borer on Friday September 18, 2015. The Class Notes belongs to ACG 2071 at University of Florida taught by Deborah Garvin in Fall. Since its upload, it has received 34 views. For similar materials see /class/206792/acg-2071-university-of-florida in Accounting at University of Florida.
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Date Created: 09/18/15
0 m dle I Rgmw Queslms 6 OOWVOHS Review Questions Midterm 1 39 1 Here are selected data for Anthony ccrp39oration 3 wk War 5 on account Wat s cth rate as 39th 13 39 k39 1 d m 31 lm mo Wizsst siszcogauccm wor mpesanventory attte en 3quot muwqaltap q39wo sun 0 B55200 6U 910 DL 0 a 7M lc39fs l W mic Mlum wpwx mo 3 00 y I 23300 mod Mumf opmv img 5051 AWIIOQ a 39 E None of the above E 5 MW Huh 7 Cp r DYrG o eds mumsQ5 330 but 2 Sunuyhmuk Orange Groves processes a variety of fresh juices The company has the following expeuges for July EB i 0 I 100 J Roma rudqu Swvice DisHi bud l en rowto quotbrieH g R D D l h bwhlon What is the total cost for the customer service category of the value ch39ain T6155 9 Ho 39 l 391 Va l u e Ohm n PM ug uwe 0WM50MUE 0 Co 3 9f oducl s RwD 9R3 i an 7 Odmdnb erv ij 7 TJI S l Yi budlb n va grutg 3 c32000 What is the total production costs of the value chain 3 QS 000 customer 3 Comfy Furniture Company manufactures lmith at its Akron Ohio factory Some of its costs from the past year include on on 7000 15 7 000 51500 31202141 000 l 31500 3979 000 00 26500 Prime costs for Comfy Furniture Company totaled 03332000 000 com Dm 0 DL B 79000 0 2 g L 500 c 211500 Conversion Cossz DL 1 P010 git E None of the above 4 First Sporting Equipment costs from the 331 year include 515 t Mobdmrs 0m to D L m 0 H to customers 3956 5 3e 5 w to 8amp3 Period costs for First Sporting Equipment totaled A 201000 Em pg 5amp39 S 3 C 99000 D 32000 E None of the above 5 Active Apparel Company reports the Following data for its rst year of operation 0005 omitted 5 g S at What are the total manufactun ng costs for the year 13 m U wad 39DL 0 mi quot A 685000 B 493000 MD 0010 mods T6000 m hu coslfxsor r E None ofthe above quot E Irwu LU hw39 lt180 000gt C 0 WMQ 500000 Tw rotl Mauve Coir 5002ml9 gt00Q Lw D L used Waslooo 6 A company produces two products A and B and estimates that its manufacturing overhead costs will be 261780 MOH has traditionally been allocated on the basis of direct labor hours Estimated data follows Product A Product B 9 Estimated volume 500 units 1250 units A o39l hrs 1500 hrs QOi Direct labor hours per unit 1 S00 hr 5 2 5000 est DLH 5 Estimated OH Estimated Activity Activity Centers Cost Product A Product B 39Qirb E Machine setups 27140 20 26 quotllp 593008 Maintenance sq ft 183040 1620 2540 q 1190 SW Supervising Assembly DLH 51 600 56 quot 288 3 01 DLlls 261780 A Determine the overhead allocated per unit to each product under the traditional approachl plantwide predetermined overhead allocation rate ublkg DLH Overhead rate 2 261 780 f 8726Dl39nll 3000 DLHs 500 units x 1hr 1250 x 2 Allocated overhead Product A 8726 x lDLH 8726 Product B 8726 x 2DLH 17452 B Determine the overhead allocated per unit to each product under ABC TOW 0 lquot ailMd W73 Ac 1 i v i 13 39en 61 rates QP 0 if all 33 Setups 27 I 40416 500sclup r dw l 107 Om Maintenance 1 830404J 60 44sqtt Sup Assembly 51600344 150DLH Allocated Overhead Product A Product B Setups 20 x 500 11800 15340 26 x 590 l1aintenance 1620 x 44 71280 1 391 1760 2540 44 Sup Assembly 56 x 150 8400 288 x 150 91480 170300 500 units 1250 units Overhead per unit 012m lth 1139 8200 13624 J Ovarob shat ol l usl wglltmlnxde 00 t s was C Which product overcosted under traditional overhead allocation approach Product B the high volume product was overcosted using traditional method and Product A the low volume product was undercosted under the traditional approach 7 At the end of the period Kent Company had the following balances in selected accounts Raw Materials Inventory Debit balance 90000 Finished Goods Inventory Debit balance 180000 Work in Process Inventory Debit balance 70000 5 1330 000 Cog l39 in Cost of Goods Sold Debit balance 1000000 lrw 000013 96V Manufacturing Overhead Debit balance 1000 7 7 39Pmde g worked on a Prepare the journal entry to close the Manufacturing Overhead account if the balance in the account is considered material Review MOH Process mew lf material apportion among WIP FG amp COGS based on relative costs in these accounts WIPInvz 70000 x I00000 5600 increase39b MP 100 0 00021quot n lt 1250000 FGlnv 180000 X 100000 14400 inc 1 3 WW 1250000 COGS 1000000 x 100000 80000 incl 39lD COGS 1250000 Journal Entm WIP Inventory 5 5600 F G Inventory 14400 COGS 80000 Manufacturing Overhead 100000 0 zero ouj NOH hm b Prepare the entry assuming the balance is not considered material If not material close difference to COGS COGS 100000 MOH 100000 MOH Process As DM amp DL used to build product costs traced directly to WIP lnv WIP Inv RM lnv Wages Payable MOH is applied not directly to WIP Inv but accumulated in a temporary account MOH Cost by predetermined OH allocation rate Following are made up numbers just to show process 1 Co incurred actual MOH costs of 250000 consisting of lndirect Materials 20000 Indirect Labor 30000 Rent Exp On Equip amp Facility 200000 MZOH Account D OSgt sejrf3 Credits 1 69m ln a k ff GIquot C Ind Mat 20000 150000 OH applied to Product than Kenb m I kite lnd Labor 30000 Rent Exp 200000 100000 MOH applied to product by predetermined OH allocation rate based on DL Hours Debit WIP lnv Job 20 150000 Credit MOH 150000 for OH applied 50 debit balance in MOH account of 100000 Actual OH more than applied OH or underapplied MOH 1 3 At the end of 2009 Gator Company had two jobs still in process with a total balance of 5000 DMamp DL 0 amp MOH According to the respective job cos39t sheets the jobs had 1 200 and 1300 in direct materials costs I and 400 and 100 in direct labor costs What overhead rate is Gator using a 25 of direct labor costs m DL 3973 m quot b 80 of direct material costs Job 139 1200 400 1600 c 10 of direct labor costs Job 2 1300 4 L400 d 50 of direct material costs 2500 500 3000 3000 MO 7 5000 T39o39t39m 00 5390 039 1 39 O 2000 DM 2500 x MO overhead allocation rate 2000 2000 2500 80 DM 2500 x 80 overhead allocation rate 2000 This is only alternative that results in 2000 MOH 45 10 x Emooo gngs 00 I 1 Q 10 v 800 900 3 so 00 T l yr 3630 L asco 0m Iago00 9 A company has monthly xed costs of 1 12000 The variable costs are 500 oer unit If the sales price of a unit is 2000 and We sell 8000 units the company39s total variable costs w111be A 120000 Fr 10 1395 3 Constcuft wldn es 7 V 5 W W in acttut C 112000 D 160000 To39ml VMWblLCO b Gul n l diller ENoneoftheabove ro r39h39on 3 C511 63 in Uolumw Variable Co hi luhii Siom s Emma quQhQNAES in o omen 000 Lmi l j x itsUAW NomeTwo 10 Gator Pharmaceuticals manufactures an overthecounter allergy medication called Bertos Gator has developed several different Bertos products tailored to speci c markets For example the company sells large commercial containers of 1000 capsules to healthcare facilities and travel packs of 20 capsules to shops in airports train stations and hotels Gator Co s controller has just returned from a conference on ABC and asks Tim supervisor of the Bertos product line to help her develop an ABC system They identify the following activities related costs and cost allocation bases Activity Estimated Indirect Allocation Estimated Activity Costs Base Quantity of Allocation Base Materials handling 160000 Kilos 7 20000 kilos Packaging 390000 7 Machine hours 2000 hours Quality assurance 110000 Samples 2200 samples Total indirect costs 660000 The commercialcontainer Bertos product line had a total weight of 8200 kilos used 1200 machine hours and 270 required samples The travelpack line had a total weight of 6500 kilos used 400 machine hours and 370 required samples Gator produced 2700 commercial containers of Bertos and 40000 travel packs Reguirements a Compute the cost allocation rate for each activity Materials Handling Packaging Quality Assurance Estimated indirect 160000 390000 1 l0000 Activity costs Estimated quantity of 20000 kilos 2000 hours 2200 samples Cost allocation base 1 Cost allocation rate 33 8kiTo l95h0ur 50sample bUse the activitybased cost allocation rates to compute the indirect cost of each unit of the commercial containers amp the travel packs ivitv Costs l er lmii Commercial Container Tray llielgk Materials handling 8200 and 6500 x 8 33 65600 52000 Packaging 1200 and 400 x 195 234000 78000 Quality assurance 270 and 370 x 50 13500 18500 Total indirect costs 313100 148500 Number of units 2700 40000 Indirect activity cost per unit rounded 1 1596 371 cGator s original single allocation based costs system allocated indirect costs to products at 350 per machine hour Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system Then compute the indirect cost per unit for each product Indirect costs per unit under old single predetermined overhead allocation rate Cornwial Container Travel Pack Machine Hours 1200 amp 400 X 350 420000 l4t 000 Number of units 2700 1 40000 Indirect costs MOH per unit 15556 350 d Compare the activitybased costs per unit to the costs from the simpler original system Which products were overcosted and which products were undercosted Commercial Container Travel Pack ABC Overhead Allocation System 1 1596 m 371 M 00 S cos Original POHR 15556 gt grep 350 gt A er Before implementing ABC Commercial Containers were overcosted and Travel Packs undercosted 11 Gator 8 Co is a CPA firm They charge clients at a billing rate equal to 150 of their total job cost Total job cost is total of 1 Professional time spent on the client 140 per hour cost of each professional 2 Operating overhead allocated to the client s job Gator allocates operating overhead based on professional hours spent on the job Gator estimates that its 4 professionals will incur a total of 10000 professional hours working on client jobs during the year All operating costs copy costs office support salaries office rent expense travel reimbursements etc are assigned to 3 activities Total activity costs cost drivers and total usage of those cost drivers are estimated as follows Activity Total Cost Total Usage Activity A6catlon Rate Activity Driver By clients Cost Transportation 12000 Mileage 5000 miles 12000 5000 miles Simmile To clients Copying 30000 of copies 20000 copies 30300 2039000 cor 51395OCOpV Office Support 200000 Office support 6000 hours 200000 6000 hrs 3333hr Hours Total operating overhead 242000 Billy Donovan hired Gator 8 Co to prepare his 2011 Federal Income Tax Return Gator Co incurred the following on Coach Donovan s 2011 tax return 25 professional hours 240 miles back and forth to O Connell Center to meet with client 300 copies 15 hour of office support Req 1 What would be charged to client given the current costing structure Req 2 What would be charged to client using ABC costing 1 Op OH Total Prof Hrs Current Op OH allocation rate 242000 10000 prof hrs 2420prof hr Donovan Bill Prof time 25 hrs x 140hr 3500 Op OH 25 hrs X 2420 Q Total cost of Job 4105 Markup on Cost x 150 Charge to client g 15750 2 Using ABC Costing Prof time 25 hrs x 140hr 3500 Op OH 240 miles x 240mi1e 576 300 copies x LSDcopy 450 15 hrs support x 3333hr Total cost of Job 5026 Markup on Cost x 150 Charge to client 7539