# Ch 4 Cost Accounting

December 31, 2017 Accounting

Ch4 #32, 34, 41 ACC307 #32 1) Professional Labor Hours Indirect Costs Direct Costs Legal Support Indirect-Cost Pool Cost-Allocation Base Cost Object: Direct Labor Job for clients Direct Costs 2) 2008 budgeted direct-cost rate per hour of professional labor \$104,000 / 1600 hours = \$65 per professional labor hour 3) 2008 budgeted indirect-cost rate per hour of professional labor \$2,200,000 / (25 x 1600 hours) = \$55 per professional labor hour 4) a. Litigation work for Richardson, Inc. , which requires 100 budgeted hours of professional labor. (Prepare cost estimate) Direct costs

Direct labor cost: \$65 x 100 = \$6,500 Indirect costs Legal support cost: \$55 x 100 = \$5,500 Total Job Cost = \$12,000 b. Labor contract work for Punch, Inc. , which requires 150 budgeted hours of professional labor. (Prepare cost estimate) Direct costs Direct labor cost: \$65 x 150 = \$9,750 Indirect costs Legal support cost: \$55 x 150 = \$8,250 Total Job Cost = \$18,000 #34 1) Compute the budgeted manufacturing overhead rate for 2009. Predetermined Overhead Rate = \$4,800,000 / 80,000 = \$60 per Machine Hour 2) Compute the under- or overallocated manufacturing overhead of Zaf radiator in 2009.

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Dispose of this amount using a. Applied Manufacturing Overhead = \$60 x 75,000 = \$4,500,000 Actual Manufacturing Overhead = \$4,900,000 \$4,900,000 – \$4,500,000 = \$400,000 Under-allocated in manufacturing overhead Cost of Goods Sold \$400,000 Manufacturing Overhead Allocated \$4,500,000 Manufacturing Overhead Control \$4,900,000 The COGS account after the write-off equals to \$8,400,000, the balance before the write-off of \$800,000 plus the underallocated manufacturing onverhead amount of \$400,000. b.

Proration based on ending balance (before proration) in WIP Control, FG Control, and COGS Account| Account Balance| Proration of \$400,000 of| Account Balance| ? | (Before Proration)| Underallocated MFG O/H| (After Proration)| WIP Control| 750,000| . 075 x 400,000 = 30,000| 780,000| FG Control| 1,250,000| . 125 x 400,000 = 50,000| 1,300,000| COGS | 8,000,000| . 8 x 400,000 = 320,000| 8,320,000| Total| 10,000,000| ? | 10,400,000| c. Proration based on the overhead allocated in 2009 (before proration) in the ending balances of WIP Control, FG Control, and COGS Account| Account

Balance| Allocated MFG O/H Included| Proration of \$400,000 of| Account Balance| ? | (Before Proration)| In Each Acct Bal(Before Pro)| Underallocated MFG O/H| (After Proration)| WIP Control| 750,000| 240000/4500000 = 0. 0533| . 0533 x 400,000 = 21,320| 780,000| FG Control| 1,250,000| 660000/4500000 = 0. 1467| . 1467 x 400,000 = 58,680| 1,300,000| COGS | 8,000,000| 3600000/4500000 = 0. 80| . 8 x 400,000 = 320,000| 8,320,000| Total| 10,000,000| 4,500,000| 400,000| 10,400,000| 3) I would prefer the method c, because it has all its allocated indirect cost based on the actual indirect cost rate. 41 1) TIP for the end of the June As I Lay Dieing (TIP) = 250 + 400 + 1. 5(400) = \$1,250 Ask me Later (TIP) = 350 + 200 +1. 5(200) = \$850 Total TIP in end of June = 1,250 + 850 = \$2,100 2) CCT for June Grunge Express (CCT) = 0 + 100 + 1. 5(100) = \$250 Different Strokes (CCT) = 175 + 300 + 1. 5(300) = \$925 Maybe Tomorrow (CCT) = 275 + 400 + 1. 5(400) = \$1,275 Total CCT in end of June =250 + 925 + 1,275 = \$2,450 3) 1. 5(400) + 1. 5(200) + 1. 5(100) + 1. 5(300) + 1. 5(400) =600 + 300 + 150 + 450 + 600 =\$2,100 overhead allocated Actual overhead in June = \$2,500 2,500 – 2,100 = \$400 underallocated ) a. Written off to CCT Cost of Completed Tours (CCT) \$400 Overhead Allocated \$2,100 Overhead Control \$2,500 CCT = 5650 + 400 = \$6,050 b. Prorated based on the ending balances (before proration) in TIP and CCT Account| Account Balance 6/30| Proration of \$400 of| Account Balance 6/30| ? | (Before Proration)| Underallocated MFG O/H| (After Proration)| TIP Control| 2,100| 2100/7750 = . 271 x 400 = \$108| 2100 + 108 = \$2,208| CCT Control| 5,650| 5650/7750 = . 729 x 400 = \$292| 5,650 + 292 = \$5,942| Total| 7,750| 400| 8,150| . Prorated based on the overhead allocated in June in the ending balances of TIP and CCT (before proration) Account| Account Balance 6/30| Allocated O/H Included | Proration of \$400 of| Account Balance 6/30| ? | (Before Proration)| In Each Acct Bal(Bef Pro)| Underallocated MFG O/H| (After Proration)| TIP Control| 2,100| 900| 900/2100 = 0. 43 x 400 = \$172| 2100 + 172 = \$2,272| CCT Control| 5,650| 1,200| 1200/5650 = 0. 57 x 400 = \$228| 5,650 + 228 = \$5,878| Total| 7,750| 2,100| 400| 8,150| 5. I would prefer the c method because it gives more accurate result.

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