Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 5, Problem 5.32P
Other Direct Costs | Steger Enterprises | Bluestone Inc. |
Research support labor | $36,000 | $ 77,000 |
Computer time | 8,000 | 32,000 |
Travel and allowances | 14,000 | 84,000 |
Telephones/faxes | 5,000 | 24,000 |
Photocopying | 6,000 | 14,000 |
Total | $69,000 | $231,000 |
Peyton decides to calculate the costs of each job as if Wharton had used six direct-cost pools and a single indirect-cost pool. The single indirect-cost pool would have $200,000 of costs and would be allocated to each case using the professional labor-hours base.
- 1. Calculate the revised indirect-cost allocation rate per professional labor-hour for Wharton Associates when total indirect costs are $200,000.
Required
- 2. Compute the costs of the Steger Enterprises and Bluestone Inc. jobs if Wharton Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool.
- 3. Compare the costs of Steger Enterprises and Bluestone Inc. jobs in requirement 2 with those in requirement 2 of Problem 5-31. Comment on the results
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Job Order Cost Accounting for a Service Company
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The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 60% of media purchases.
On August 1, the four advertising projects had the following accumulated costs:
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Vault Bank
$72,500
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21,800
Sleepy Tired Hotels
50,800
Tastee Beverages
31,200
Total
$176,300
During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:…
Job Order Cost Accounting Entries for a Service Business
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First Bank…
to the balance in Finished Goods? What would happen to the balance of Cost of Goods
pay
he Job by JU
30? What would happen
Sold?
Cornerstone Exercise 5.3 Job Costs Using Activity-Based Costing
Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead
to jobs. Heitger identified three overhead activities and related drivers. Budgeted information
for the year is as follows:
Activity
Cost
Driver
Amount of Driver
Materials handling
Engineering
Other overhead
$ 72,000
165,000
280,000
Number of moves
3,000
10,000
Number of change orders
Direct labor hours
50,000
Heitger worked on four jobs in July. Data are as follows:
Job 13-43
Job 13-44
Job 13-45
Job 13-46
$ 2,300
$12,700
$32,000
%24
$9,800
$2,400
(continued)
$
Beginning balance
Direct materials
$20,300
$ 6,500
$19,800
$ 8,900
$20,000
$18,000
Direct labor cost
Chapter 5 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8QCh. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q
Ch. 5 - Prob. 5.11QCh. 5 - Prob. 5.12QCh. 5 - Activity-based costing is the wave of the present...Ch. 5 - Increasing the number of indirect-cost pools is...Ch. 5 - The controller of a retail company has just had a...Ch. 5 - Conroe Company is reviewing the data provided by...Ch. 5 - Prob. 5.17MCQCh. 5 - Cost hierarchy. Roberta, Inc., manufactures...Ch. 5 - ABC, cost hierarchy, service. (CMA, adapted)...Ch. 5 - Alternative allocation bases for a professional...Ch. 5 - Plant-wide, department, and ABC Indirect cost...Ch. 5 - Plant-wide, department, and activity-cost rates....Ch. 5 - ABC, process costing. Sander Company produces...Ch. 5 - Department costing, service company. DLN is an...Ch. 5 - Activity-based costing, service company....Ch. 5 - Activity-based costing, manufacturing. Decorative...Ch. 5 - ABC, retail product-line profitability. Fitzgerald...Ch. 5 - Prob. 5.28ECh. 5 - Activity-based costing. The job-costing system at...Ch. 5 - ABC, product costing at banks,...Ch. 5 - Problems 5-31 Job costing with single direct-cost...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - Department and activity-cost rates, service...Ch. 5 - Activity-based costing, merchandising. Pharmahelp,...Ch. 5 - Choosing cost drivers, activity-based costing,...Ch. 5 - ABC, health care. Crosstown Health Center runs two...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - ABC, implementation, ethics. (CMA, adapted) Plum...Ch. 5 - Activity-based costing, activity-based management,...
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