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    Managerial Accounting

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    Please provide solutions to these questions.

    E13.6
    College carriers manufactures backpacks that are sold to students for use as book bags.
    Identify a specific item in this company's manufacturing, selling or administrative processes for which the costs would be classified as
    a. raw materials
    b. direct labor
    c. variable manufacturing overhead
    d. fixed manufacturing overhead
    e. fixed administrative expense
    f. fixed indirect selling expense
    g. variable direct selling expense

    E13.8
    Deckhand accessories, inc. manufactures women's boating shoes. Manufacturing overhead is assigned to production on a machine-hour basis. For 2009, it was estimated that manufacturing overhead would total $974,400 and that 67,200 machine hours would be used.
    a. calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2009
    b. during may, 11,720 pairs of shoes were made. Raw materials costing$56,936 were used, and direct labor costs totaled $57,600. A total of 5,680 machine hrs were worked during the month of January. Calculate the cost per pair of shoes made during January.
    c. at the end of January 3,156 pairs of shoes were in ending inventory. Calculate the cost of the ending inventory and the cost of the shoes sold during January.

    E13.10
    Lampart co. make specialty table lamps. Manufacturing overhead is applied to production on a direct labor hr basis. During the first month of the company's fiscal yr, $173,250 of manufacturing overhead is applied to production on a direct labor basis. During the first month of the company's fiscal year, $173,250 of manufacturing overhead was applied to work in process inventory using the predetermined overhead application rate of $15 per direct labor hr.
    a. calculate the number of hrs of direct labor used during November.
    b. actual manufacturing overhead costs incurred during November totaled $166,425. Calculate the amount of over-or under applied overhead for November.
    c. identify two possible explanations for the over- or under applied overhead.
    d. explain the account appropriate for the over-or under applied overhead at the end of November

    E13.12
    Staley toy co. makes toy flutes. Two manufacturing overhead application bases are used. Some overhead is applied on the basis of machine hrs at the rate of $7.50 per machine hr, and the balance of the overhead is applied at the rate of 200% of direct labor cost
    a. calculate the cost per unit of a production run of 4,260 toy flutes that required
    1. Raw materials costing $2,880

    2. 108 direct labor hrs costing $1,836
    3. 180 machine hrs.
    b. at the end of February, 3,930 of these toy flutes had been sold. Calculate the ending inventory value of the toy flutes still in inventory at February 28.

    P13.16
    Galvaset industries manufactures and sells custom made windows. Its job costing system was designed using an activity based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning three manufacturing overhead costs drivers (activities). Assume that the direct labor rate is $20 per hr and that there were no beginning inventories. The following information was available for 2009, based on an expected production level of 50,000 units for the yr, which will require 200,000 direct labor hrs

    Activity budgeted costs cost driver used cost
    (cost driver) for 2009 as allocation base allocation rate

    Materials handling $325,000 number of parts used $0.25 per part
    Cutting and lathe work 2,340,000 number of parts used 1.80 per part
    Assembly &inspection 5,000,000 direct labor hours 25.00 per hr

    The following production, costs and activities occurred during the month of march:

    Units direct number of direct labor hrs
    Produced materials costs parts used

    3,800 $142,000 83,600 17,180

    a. calculate the total manufacturing costs and the cost per unit of the windows produced during the month of march (using the activity-based costing approach)
    b. assume instead that Galvaset industries applies manufacturing overhead on a direct labor hrs basis (rather than using the activity-based costing system previously described). Calculate the total manufacturing costs and the cost per unit of the windows produced during the month of march
    c. compare the per unit cost figures calculated in parts a and b. which approach do you think provides better information for manufacturing managers? Explain your answers.

    P13.18
    Millan, inc. manufactures digital voice recorders. During 2008, total costs associated with manufacturing 208,000 of the new MV-5253 model (introduced this yr) were as follows:

    Raw materials....................................................... $1,788,800
    Direct labor........................................................... 2,953,600
    Variable manufacturing overhead............................ 748,800
    Fixed manufacturing overhead............................... 707,200

    a. calculate the cost per recorder under both variable costing and absorption costing

    b. if 20,400 of these recorders were in finished goods inventory at the end of 2008, by how much and in what direction ( higher or lower) would 2008 cost of goods sold be different under costing than under absorption costing?
    c. express the digital voice recorder cost in a cost formula. What does these formula suggests the total of making an additional 1,700 recorders would be?

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    Solution Preview

    Please see the attached file

    E13.6
    College carriers manufactures backpacks that are sold to students for use as book bags.
    Identify a specific item in this company's manufacturing, selling or administrative processes for which the costs would be classified as

    a. raw materials

    These would be the material that would go in the backpack and so the items would be fabric, zipper, shoulder straps.

    b. direct labor

    This would be for labor employed directly on production and would include wages of sewing machine operator.

    c. variable manufacturing overhead

    Costs related to production that vary with production and example would be electricity for sewing machine.

    d. fixed manufacturing overhead

    Costs that do not change with production and example would be depreciation of sewing machine.

    e. fixed administrative expense

    Costs that are constant and the example would be president's salary.

    f. fixed indirect selling expense

    Expenses which are not directly related to sales and the example would be sales manager's salary.

    g. variable direct selling expense

    Expenses which vary directly with sales and the example would be sales force commissions.

    E13.8
    Deckhand accessories, inc. manufactures women's boating shoes. Manufacturing overhead is assigned to production on a machine-hour basis. For 2009, it was estimated that manufacturing overhead would total $974,400 and that 67,200 machine hours would be used.
    a. calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2009

    Predetermined overhead application rate = Estimated overhead/estimated machine hours
    = 974,400/67,200 = $14.50 per MH

    b. during may, 11,720 pairs of shoes were made. Raw materials costing$56,936 were used, and direct labor costs totaled $57,600. A total of 5,680 machine hrs were worked during the month of January. Calculate the cost per pair of shoes made during January.

    The total cost is
    Direct Material 56,936
    Direct Labor 57,600
    Overhead (14.50X5,680) 82,360
    Total cost 196,896
    Total pairs 11,720
    Cost per pair = 196,896/11,720 = $16.80 per pair

    c. at the end of January 3,156 pairs of shoes were in ending inventory. Calculate the cost of the ending inventory and the cost of the shoes sold during January.

    Cost of ending inventory = 3,156X16.80 = $53,020.80
    Cost of shoes sold = (11,720-3,156) X 16.80 = $143,875.20

    E13.10
    Lampart co. make specialty table lamps. Manufacturing overhead is applied to ...

    Solution Summary

    The solution explains various problems in managerial accounting

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