Problem 1 (With Answer Sheet)
| 1. Distinguish between a traditional costing system and an activity-based costing (ABC) system, and explain some benefits of ABC? |
Problem 2
| Lockhart Products manufactures custom-built ships. Each ship is built to customer specifications. Most of the direct labor time is spent on welding activities. Following is the job cost sheet for an incinerator manufactured for the Galveston Harbor Corporation: |
| | Lockhart Products | | | | | Job Cost Sheet |
| | Job: | Galveston |
| | | | Form Reference | Direct Labor | | | Direct Material | | | Applied Overhead | | | Total |
| | | | | Hours | Rate | Total | Qty | Cost Per Unit | Total | Qty | Rate | Total |
| | 8-May-15 |
| | M. Martinez | | DTS.05.08.X7.RB | 9 | $25 | $ 225 | | | | | | | $ 225 |
| | V. Garza | | DTS.05.08.X7.SS | 1 | $12 | $ 12 | | | | | | | $ 12 |
| | Steel | | MR.05.08.X7.RB | | | | 10 | $ 80 | $ 800 | | | | $ 800 |
| | 9-May-15 |
| | M. Martinez | | DTS.05.09.X7.SS | 2 | $12 | $ 24 | | | | | | | $ 24 |
| | Applied Overhead | | | | | | | | | ? | ? | $ 360 | $ 360 |
| | | | Totals | 12 | | $ 261 | | | $ 800 | | | $ 360 | $ 1,421 |
| (a) | What types of costs do you imagine would be included in factory overhead? If overhead is applied based on direct labor hours, what is the application rate? |
| (b) | Lockhart is considering installation of a robotic machine that will do all welding operations. How might this decision impact the total overhead and the application method? |
| (c) | How does the applied overhead relate to the actual overhead? When they are not the same, what happens to the difference? Why is actual overhead not assigned to each job? |
&"Myriad Web Pro,Bold"&20B-19.04
Problem 2 Worksheet
&"Myriad Web Pro,Bold"&12Name:
Date: Section: &"Myriad Web Pro,Bold"&20B-19.04
Problem 3
| Tee Time Products, Inc. produces handmade golf clubs. The process is labor intensive. The speed at which a club can be built depends on the skill level of the individual worker. Management has established a standard of 2 labor hours per club. The standard wage rate is $12 per hour. During a recent month, 2,500 custom clubs were produced. Management was pleased that only 4,900 labor hours were worked; however, total wages amounted to $63,700.
Compute the total variance for labor, and determine how much is related to rate and efficiency components.
|
&"Arial,Bold"&12 &"Myriad Web Pro,Bold"&20B-22.06
Problem 3 Worksheet
| Labor variances: |
| Actual Labor Cost |
| Actual hours of labor | - |
| Actual rate | $ - |
| Actual cost of direct labor | $ - |
| Standard Labor Cost |
| Output - number of clubs | - |
| Standard hours per club | $ - |
| Standard hours to achieve output | - |
| Standard rate per hour | $ - |
| Standard cost of direct labor | $ - |
| Total labor variance (standard cost v. actual cost) | $ - |
| Labor rate variance: |
| Standard rate | $ - |
| Actual rate | - |
| | $ - |
| Actual hours | - |
| Unfavorable labor rate variance | $ - |
| Labor efficiency variance: |
| Standard hours | - |
| Actual hours | - |
| | - |
| Standard rate | $ - |
| Favorable labor efficiency variance | $ - |
&"Myriad Web Pro,Bold"&12Name:
Date: Section: &"Myriad Web Pro,Bold"&20B-22.06
Problem 4
| Burner Technology manufactures rugged cell phones for use in adverse working environments. Burner tries to maintain inventory at 40% of the following month's expected unit sales. Burner began the year with 8,000 units in stock, based on the following unit sales projections prepared by the sales manager:
|
| | January | 20,000 |
| | February | 25,000 |
| | March | 18,000 |
| | April | 22,000 |
| Prepare a schedule of planned unit production for January through March. |
&"Arial,Bold"&12 &"Myriad Web Pro,Bold"&20B-21.03
Problem 4 Worksheet
| Planned production in units: |
| | January |
| Estimated units sold |
&"Myriad Web Pro,Bold"&12Name:
Date: Section: &"Myriad Web Pro,Bold"&20B-21.03
rlsewa
acct321-2.xlsx
