ACCT230 Homework Week 3, Chapter 4

Problem 1:
Nutt Industries electricity costs and machine hours over a six-month period follow: Machine Hours January February March April May June
2,000 2,500 3,000 2,400 2,800 2,200

Electricity Cost
$4,800 5,200 5,400 5,000 5,600 5,000

Using the high-low method, what is the estimated electricity cost per machine hour? 600/1000=.60/m .60 is the estimated electricity cost

Problem 2:
Nutt Industries electricity costs and machine hours over a six-month period follow: Machine Hours
2,000 2,500 3,000 2,400 2,800 2,200

January February March April May June

Electricity Cost
$4,800 5,200 5,400 5,000 5,600 5,000

Using the high-low method, what is the formula that can be used to estimate electricity costs at different levels of volume? Electricity = total cost fixed cost / unit of volume

Problem 3:

Venus Company has developed the following flexible budget formula for annual indirect labor cost: Total annual cost = $12,000 + $.25 / unit Operating budgets for the current month are based on 5,000 units. Indirect labor costs included in this monthly planning budget are_____1252.40______________. Total annual cost = $12,000 + $.25 / unit 12,000+.25 / 5000= 2.40 .25* 5000=1250 1250 +2.40=1252.40

Problem 4:
Manufacturing uses the direct labor cost method for applying factory overhead to production. The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively. During the year, the company started and completed Job 352A, which had direct material and labor costs of $32,000 and $45,000, respectively. What was the cost of Job 352A?

Direct Materials ..32,000 Direct labor ..45,000 Factory over head cost (50% of direct labor) ..22,500 Total cost of completed job 99,500
99,500 is the cost of job 352 A

Problem 5:
The Mason Corporation budgeted overhead at $240,000 for the period for Department A based on a budgeted volume of 60,000 direct labor hours. During the period, Mason started and completed Job B25, which incurred 200 labor hours at a cost of $2,200, and $5,000 of direct materials. What was the cost of Job B25? Direct Materials .. 5000 Direct labor (200 hours). 2,200 Factory over head (200 hours @ $ 4). 800 Totals cost of completed job $ 8000

Problem 6:
The Owens Company uses the machine hour method of applying factory overhead to production. The budgeted factory overhead last year was $200,000, and there were 40,000 machine hours budgeted. Job 84 was started and completed during the period. Direct materials costing $900 were incurred. Twenty-five direct labor hours were worked at a cost of $350, and 40 machine hours were incurred. What was the cost of Job 84? Direct Materials 900 Direct Labor.. 350 Factory overhead ( 40 hours @ $ 5) .200 Total cost of completed job ..1450 1450 is the total cost of job 84

Problem 7:
Manufacturing uses the direct labor cost method for applying factory overhead to production. The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $800,000, respectively. Actual direct labor cost and factory overhead were $1,100,000 and $825,000, respectively. What is the amount of under- or over applied factory overhead? 55,000 is the amount of factory over head that is over applied