Alan Collins (V2.1)

Alan Collins (V2.1):
(Adapted with permission of CMA Canada)
Alan Collins is a forensic accountant and has been hired by the Widget Department of the
Global Corporation. A disgruntled cost accountant in the administrative area within the Widget
Department broke a water main that destroyed certain computer files. Management has been
gathering data from whatever source possible. It is hoped that Alan's work can be used as a
template for staff in the future.
Here is what management has passed on to Alan:
Each widget requires a standard direct labor input of 5.75 hours per unit. Total (combined
variable and fixed) overhead is applied to production using a standard (predetermined) amount
per direct labor hour. The balance of the Factory Overhead Control Account is written off to
Cost of Goods Sold at the end of every month.