Assignment 1 (20 marks)
Question 1 (5 marks)
- How do fixed costs in a
business create a problem for job costing. - Provide examples of wages
that might be deemed to be (1) a direct cost and (2) an indirect costs.
Question 2 (5 marks)
Estimated
or budgeted cost and operating data for three companies for 2013 are given
below:
Company
X Company Y Company Z
Units
to be produced 10,000 8,000 12,000
Machine-
hours 50,000 10,000 6,000
Direct
labour- hours 12,000 16,000 36,000
Direct
labour cost $48,000 $64,000 $150,000
Factory
overhead cost 150,000 40,000 60,000
Predetermined
overhead rates are calculated on the following bases in the three companies:
Overhead
rate based on
Company
X Machine-hours
Company
Y Direct
labour-hours
Company
Z Direct
labour cost
Required:
a. Calculate
the predetermined overhead rate to be used in each company during 2013. (1.5
marks)
b. Assume
that three jobs are worked on during 2013 in company X. Machine-hours recorded
by jobs are: job 23, 21,000 hours; job 29, 16,000 hours; and job 31, 11,000 hours.
How much overhead will the company apply to work in process? If actual overhead
costs total $149,000 for 2012, will overhead be over- or under-applied? By how
much? (1.5 marks)
c. Of what value is the schedule of cost of
goods manufactured and how does it tie into the profit and loss statement.
Discuss. (2 marks)
