A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total direct labor cost of $20,000?
$5,000.
$16,000.
$25,000.
$125,000.
$250,000.
The R&R Company's production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company's factory overhead incurred for August is:
$2,000.
$6,500.
$8,500.
$21,500.
$36,500.
M.A.E. charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, M.A.E. Company's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should M.A.E. make at year-end?
No entry is needed.
Debit Factory Overhead $5,000; credit Cost of Goods Sold $5,000.
Debit Cost of Goods Sold $5,000; credit Factory Overhead $5,000.
Debit Factory Overhead $5,000; credit Goods in Process Inventory $5,000.
Debit Factory Overhead $5,000; credit Finished Goods Inventory $5,000.
During March, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of the units transferred, 25,000 were in process at the beginning of March and 110,000 were started and completed in March. March's beginning inventory units were 100% complete with respect to materials and 55% complete with respect to labor. At the end of March, 30,000 additional units were in process in the production department and were 100% complete with respect to materials and 30% complete with respect to labor. Compute the number of units transferred to finished goods.
110,000.
135,000.
105,000.
165,000.
144,000
13Aniston Enterprises manufactures stylish hats for sophisticated women. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows.
Goods in Process, May 1 (50,000 units, 100% complete for direct materials, 40% complete with respect to direct labor and overhead; includes $70,500 of direct material cost; $34,050 of conversion costs).
Units started in May - 225,000
Units completed in May - 200,000
Goods in Process, May 31 (75,000 units, 100% complete for direct materials; 20% complete for conversion costs).
Costs incurred in May
Direct material - 342,000
Conversion costs - 352,950
If Aniston Enterprises uses the FIFO method of process costing, compute the equivalent units for materials and conversion costs respectively for May.
225,000; 225,000.
200,000; 195,000
275,000; 200,000
225,000; 195,000
200,000; 200,000
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For the first question, the overhead allocation rate is 125% of direct labor costs. The job requires total direct labor cost of $20,000. Therefore, the overhead allocated to the job would be:
Overhead = 125% of $20,000
Overhead = 0.125 * $20,000
Overhead = $2,500
So, the correct answer is $2,500.
For the second question, the factory overhead incurred for August can be calculated by adding the costs of indirect labor, property taxes on production equipment, heat, lights and power, and insurance on plant and equipment. Therefore, the factory overhead incurred for August is:
Factory overhead incurred = indirect labor + property taxes + heat, lights and power + insurance
Factory overhead incurred = $6,500 + $800 + $1,000 + $200
Factory overhead incurred = $8,500
So, the correct answer is $8,500.
For the third question, the company has charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, the Factory Overhead account has a credit balance of $5,000. Since the credit balance is not a material amount, no entry is needed. Therefore, the correct answer is no entry is needed.
For the fourth question, the number of units transferred to finished goods can be calculated by adding the units completed in March to the units transferred from the beginning inventory and subtracting the units in process at the end of March. Therefore, the number of units transferred to finished goods is:
Number of units transferred = units completed in March + units transferred from beginning inventory - units in process at the end of March
Number of units transferred = 110,000 + 25,000 - 30,000
Number of units transferred = 105,000
So, the correct answer is 105,000.
For the fifth question, if Aniston Enterprises uses the FIFO method of process costing, the equivalent units for materials and conversion costs respectively for May can be calculated by summing up the units started and completed in May and multiplying them by the percentage completion for each cost category. Therefore, the equivalent units for materials and conversion costs are:
Materials: 200,000 units (completed in May) + 75,000 units (in process at the end of May, 100% complete) = 275,000 units
Conversion costs: 200,000 units (completed in May, 40% complete) + 75,000 units (in process at the end of May, 20% complete) = 275,000 units
So, the correct answer is 275,000; 275,000.
To find the answer to each question, we need to understand the concepts and equations involved. Let's go through each question step by step.
Question 1: A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required a total direct labor cost of $20,000?
To find the allocated overhead, we need to multiply the direct labor cost by the overhead application rate.
Overhead = Direct Labor Cost * Overhead Application Rate
Overhead = $20,000 * 125% = $25,000
So the allocated overhead would be $25,000.
Answer: $25,000.
Question 2: The R&R Company's production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. What is R&R Company's factory overhead incurred for August?
To find the factory overhead incurred, we need to add up all the costs that are considered as factory overhead.
Factory Overhead = Indirect Labor + Property Taxes + Heat, Lights and Power + Insurance
Factory Overhead = $6,500 + $800 + $1,000 + $200 = $8,500
So R&R Company's factory overhead incurred for August is $8,500.
Answer: $8,500.
Question 3: M.A.E. charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, M.A.E. Company's Factory Overhead account has a credit balance of $5,000. What entry should M.A.E. make at year-end?
Since the Factory Overhead account has a credit balance, we need to debit the account to bring it to zero. The amount to be debited is the remaining credit balance, which is $5,000.
Entry: Debit Factory Overhead $5,000; Credit Cost of Goods Sold $5,000
So M.A.E. should make the above-mentioned entry at year-end.
Answer: Debit Factory Overhead $5,000; Credit Cost of Goods Sold $5,000.
Question 4: During March, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Starting units in process: 25,000 (100% complete for materials, 55% complete for labor). Units started and completed in March: 110,000. Ending units in process: 30,000 (100% complete for materials, 30% complete for labor). Compute the number of units transferred to finished goods.
To compute the number of units transferred to finished goods, we need to add the units started and completed in March to the ending units in process, and deduct the starting units in process.
Transferred Units = Units Started and Completed + Ending Units in Process - Starting Units in Process
Transferred Units = 110,000 + 30,000 - 25,000 = 115,000
So the number of units transferred to finished goods is 115,000.
Answer: 115,000.
Question 5: If Aniston Enterprises uses the FIFO method of process costing, compute the equivalent units for materials and conversion costs respectively for May.
To compute the equivalent units, we need to consider the completed units and the partially completed units for both materials and conversion costs.
Equivalent Units for Materials = Units Completed + (Ending Units in Process * Percentage Complete for Materials)
Equivalent Units for Conversion Costs = Units Completed + (Ending Units in Process * Percentage Complete for Conversion Costs)
Units Completed = 200,000
Ending Units in Process = 75,000
Percentage Complete for Materials = 100%
Percentage Complete for Conversion Costs = 20%
Equivalent Units for Materials = 200,000 + (75,000 * 100%) = 275,000
Equivalent Units for Conversion Costs = 200,000 + (75,000 * 20%) = 200,000 + 15,000 = 215,000
So the equivalent units for materials and conversion costs respectively for May are 275,000 and 215,000.
Answer: 275,000; 215,000.