Akmen - Job Order Costing

JOB-ORDER COSTING

Exercise 5-44 Direct Method of Support Department Cost Allocation

a.       Calculate the allocation ratios for Power and General Factory

                                                                                          Battery                       Small Motors

Power                    :     7,000/(7,000+1,000)                     0.875                                      -

                                    1,000/(7,000+1,000)                          -                                      0.125

General Factory    :   5,000/(5,000+15,000)                       0.25                                      -

                                15,000/(5,000+15,000)                         -                                         0.75

b.      Allocate the Support Services Cost to the Operating Divisions                                                                                                        

	Support Departments			Operating Divisions
	Power	General Factory		Battery	Small Motors
Overhead Cost	$   160,000	$    430,000		$   163,000	$   84,600
Power	(160,000)	-		140,000	20,000
General Factory	-	(430,000)		107,500	322,500
	0	0		410,500	427,100

c.       Assume Divisonal Overhead Rates are based on Direct Labor Hours. Calculate the Overhead Rate for the Battery Division and for the Small Motors Divisions.

·         Overhead Rate for the Battery Division                     =   163,000      =  9.06 per DLH

       18,000

·         Overhead Rate for the Small Motors Divisions          =   84,600        = 1.42 per DLH

     60,000

Problem 5-50 Overhead Rates, Unit Costs

Welding        Assembly       Finishing               Total
Estimates Overhead                $ 220,000        $   62,000        $ 150,000             $ 432,000 Direct Labor Hours                        4,500             10,000             20,500                  20,500 Direct Labor Cost                        90,000           150,000           360,000                360,000 Machine Hours                               5,000               1,000               8,000                    8,000
	Job 1                 Job 2
	Direct Materials                                  $ 6,725            $   9,340 Direct Labor Cost                                  1,800                 3,100 Direct Labor Hours                             Welding                                          10                      10             Assembly                                        60                      20             Finishing                                         20                      70 Number of Machine Hours             Welding                                          50                      50             Assembly                                        60                      25             Finishing                                         90                    125
	Total                                                   $ 8,825            $ 12,740

1.      Calculate a plantwide rate for Folsom Company Based on machine hours. What is the bid price of each job using this rate?

Plantwide rate for Folsom Company Based on machine hours:

    Machine Hours__  =    $  8,000  = $0.4 per Direct Labor Hours

Direct Labor Hours          $20,500

                

Bid price of the Job 1 = Total Manufacturing Cost + (Typical Bid Price) (Departement Overhead Rates)

                                   =    $ 8,825   +   ( $ 8,825 x 35%) ( 0.4 )

                                   =    $ 8,825   +   ( $ 3,089 ) ( 0.4 )

                                   =    $ 8,825   +     $ 1,236

                                   =    $ 10,061

Bid price of the Job 2 = Total Manufacturing Cost + (Typical Bid Price) (Departement Overhead Rates)

                                   =    $ 12,740   +   ( $ 12,740 x 35% )  ( 0.4 )

                                   =    $ 12,740   +   ( $ 4,459 ) ( 0.4 )

                                   =    $ 12,740   +     $ 1,784

                                   =    $ 14,524

2.      Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates?          

Departmental overhead rates for the producing departments:

Estimated Overhead  =  $ 43,200 = 2.10 per Direct Labor Hours

Direct Labor Hours        $ 20,500

                

Bid price of the Job 1 = Total Manufacturing Cost + (Typical Bid Price) (Departement Overhead Rates)

                                   =    $ 8,825   +   ( $ 8,825 x 35%) ( 2.10 )

                                   =    $ 8,825   +   ( $ 3,089 ) ( 2.10 )

                                   =    $ 8,825   +     $ 6,489

                                   =    $ 15,331

Bid price of the Job 2 = Total Manufacturing Cost + (Typical Bid Price) (Departement Overhead Rates)

                                   =    $ 12,740   +   ( $ 12,740 x 35%)  ( 2.10 )

                                   =    $ 12,740   +   ( $ 4,459 ) ( 2.10 )

                                   =    $ 12,740   +     $ 9,364

                                   =    $ 22,104

Problem 5-54 Predetermined Overhead Rates, Variances, Cost Flows

1.      Assuming that overhead is applied on the basis of direct labor cost, what was the overhead rate used during the first quarter of the year?

Applied Overhead      = Direct Labor Cost x Overhead Rate

$ 140,000                     = $ 80,000 x Overhead Rate

Overhead Rate                         = $ 140,000 / $ 80,000

Overhead Rate                          = 1.75 atau 175 %

2.      What was the applied overhead for the first quarter? The actual overhead? The under or overapplied overhead?

     Applied Overhead                  = $ 140,000

     Actual Overhead                     = $ 138,500

     Overlapplied Overhead           = $     1,500

3.      What was the cost of the goods manufactured for the quarter?

Direct materials                                        $   40,000

Direct labor                                                   80,000

Overhead applied                                        140,000

                                                                    260,000

Add: Beginning work in process                  17,000

Less: Ending work in process                  (   32,000)

Cost of goods manufactured                    $ 245,000

4.      Assume that the overhead variance is closed to the cost of goods sold account. Prepare  the journal entry to close out the overhead control account. What is the adjusted balance in Cost if Goods Sold?

Overhead Control                                                $     1,500

Cost of Goods Sold                                        1,500

Adjusted cost of goods sold:                      210,000

                                                       (  1,500)

                                                                  $ 208,500

5.      For Job 32, identify the costs incurred for direct materials, direct labor, and overhead.

Direct Materials ($32,000 – $10,000 – $17,500)              $   4,500

Direct Labor (1,000 × $10)                                                  10,000

Overhead Applied (175% × $10,000)                                 17,500

Ending work in process                                                    $ 32,000

Problem 5-58 Support Department Cost allocation: Comparison of Methods of Allocation    

	Support Departments		Producing Departments
	Maintenance	Power	Drilling	Assembly
Overhead costs	$     320,000	$    400,000	$          163,000	$          90,000
Machine hours	-	22,500	30,000	7,500
Kilowatt-hours	40,000	-	36,000	324,000
Direct labor hours	-	-	5,000	40,000

1.      Prepare bids for Bender by using each of the following allocation methods (allocation power costs first)

a.      Direct Method

	Drilling	Assembly
Machine : 30,000/(30,000+7,500)	0.80	-
7,500/(30,000+7,500)	-	0.20
Power    : 36,000/(36,000+324,000)	0.10	-
324,000/(36,000+324,000)	-	0.90

		Support Departments				Producing Departments
		Maintenance		Power		Drilling	Assembly
	Direct costs	$        320,000		$      400,000		$          163,000	$          90,000
	Machine (a)	(320,000)		-		256,000	64,000
	Power (b)	-		(400,000)		40,000	360,000
	Total	$                     0		$                 0		$          459,000	$        514,000
Catatan :
(a) Machine: Drilling     : 0.80 x $320,000 = $256,000
Assembly : 0.20 x $320,000 = $  64,000
(b) Power   : Drilling     : 0.10 x $400,000 = $   40,000
Assembly : 0.90 x $400,000 = $360,000

·         Department Drilling    : Overhead Rate = $459,000 : 30,000 mhrs = $15.3 per machine hour. Product cost and price :

Prime cost                           $ 18.17

Overhead (3 x $15.3)         $ 45.9       

Total unit cost                     $ 64.07

·         Bid Price = $64.07 x 1.15 = $73.6805

b.      Sequentoal Method

	Maintenance	Drilling	Assembly
Machine : 30,000/(30,000+7,500)	-	0.80	-
7,500/(30,000+7,500)	-	-	0.20
Power :  40,000/(40,000+36,000+324,000)	0.10	-	-
36,000/(40,000+36,000+324,000)	-	0.09	-
324,000/(40,000+36,000+324,000)	-	-	0.81

		Support Departments				Producing Departments
		Maintenance		Power		Drilling		Assembly
	Direct costs	$       320,000		$      400,000		$          163,000		$          90,000
	Machine (a)	(360,000)		-		288,000		72,000
	Power (b)	40,000		(400,000)		36,000		324,000
	Total	$           -		$            -		$          487,000		$        486,000
Catatan :
(a) Machine : Drilling        : 0.80 x ($320,000 + $40,000) = $288,000
Assembly     : 0.20 x ($320,000 + $40,000) = $72,000
(b) Power    : Maintenance : 0.10 x $400,000 = $40,000
Drilling         : 0.09 x $400,000 = $36,000
Assembly      : 0.81 x $400,000 = $324,00

·         Department Drilling : Overhead Rate = $487,000 : 30,000 mhrs = $16.2333

Prime cost                               $  18.17

Overhead (3x $16.2333)         $  48.6999

Total unit cost                         $  34.4033

·         Bid Price = $34.4033 x 1.15 = $39.5638

2. Which method most accurately reflects the cost of producting the front-end assemblies, Why?

Metode yang paling akurat menurut saya dalam kasus tersebut adalah metode langsung. Metode langsung adalah metode yang sangat simpel dan cara yang paling mudah untuk mendukug biaya-biaya dalam departemen. Selain itu metode langsung juga tidak saling berpengaruh terhadap biaya yang lain. Metode langsung juga hanya memberikan dukungan biaya terhadap departemen produksi. Sehingga biaya-biaya dalam depertemen pendukung menjadi nol (habis) untuk dialokasikan ke departemen produksi. Selain itu, metode langsung juga memungkinkan untuk mendapatkan keuntungan yang lebih besar, di mana harga yang ditawarkan lebih tinggi dibandingkan dengan metode percontohan. Hal ini sebabkan karena dalam metode langsung, biaya dalam departemen pendukung (power dan machine) dialokasikan secara keseluruhann ke departemen produksi, sementara dalam metode bertahap, biaya power dalam departemen pendukung dialokasikan terlebih dahulu ke departemen pendukung (machine) dan ke depertemen produksi (grinding dan assembly) kemudian deprtemen pendukung (biaya machine) dialokasikan ke departemen produksi (grinding dan assembly).