-anything other than direct labor and direct materials (ex: electricity, machine maintenance costs, and factory supervisor salary)
Construction company applies overhead at a rate of $65 per direct labor hour. Laborers are paid $30 per hour. One project was charged $1,200,000 in direct materials and $450,000 in direct labor costs. Apply overhead to the project.
$450,000/$30= 15,000 x $65= $975,000
Cost of Finished Goods Manufactured
Work in process inventory, beginning of year.............$30,000 + Direct materials used...150,000 +Direct labor..............................300,000 +Manufacturing overhead...360,000 = Total cost of all work in process during the year.......................................................840,000 Less: Work in process inventory, end of the year.......................................................(40,000) Cost of finished goods manufactured....800,000
Sales - COGS =Gross profit- selling and administrative expenses = income from operations- interest expense = income before income taxes- income taxes expense = net income
Company's budget is $6,000,000 for manufacturing overhead, 50,000 direct labor hours, and 250,000 hours of machine time. If they apply overhead using a predetermined rate based on machine-hrs, what amount of overhead will be assigned to a unit of output which requires 0.5 machine hours and 0.25 labor hours to complete?
overhead rate= estimated overhead costs/ estimated units in the activity base 6,000,000/250,000= $24/hour $24 x 0.5 hours per unit= $12
(refer to #15 on midterm for chart) Using the high-low method, compute the variable element of manufacturing overhead cost per machine hour. Also, compute the fixed element of the monthly overhead cost using the high low method.
(2) fixed overhead cost take highest overhead 198,000 - (110,000 x 1.50) = $33,000 fixed cost
product no.CK74 Maximum capacity with present facilities= 4,500 units Total fixed cost (per period)= $986,337 Variable cost per unit= $120.29 Sales price per unit= $200.48 (1) What is the contribution margin per unit? (2) What is the number of units needed to break-even? (3) What is the sales volume needed for $245,000 operating income?
(1) Sales price per unit- variable cost per unit= contribution margin (80.19) (2) Total fixed cost/ contribution margin= number of units needed (12,300) (3) Total fixed cost + desired operating income/ contribution margin ratio (3,078,343) contribution margin ratio= contribution margin/sales price per unit
definition of common fixed costs in a responsibility income statement
fixed costs that jointly benefit several responsibility centers of the business
definition of responsibility margin
revenue less variable costs and traceable fixed costs
common fixed costs
jointly benefit several parts of the business and does not change significantly
If the standard quantity of materials is 84,500 units at $0.15 per unit and the actual quantity is 95,000 units at $0.12 per unit, then the total materials cost variance is:
(standard quantity x standard price) - (actual quantity x actual price)= materials cost variance (84,500 x $0.15) - (95,000 x $0.12)= $1,275 favorable
If the standard quantity of materials is 84,500 at $0.15 per unit and the actual quantity is 95,000 units at $0.12 per unit, then the materials quantity variance is:
standard price x (standard quantity - actual quantity)= materials quantity variance
0.15 x (84,500- 95,000)= -1,575
If the standard quantity of materials is 84,500 units at $0.15 per unit and the actual quantity is 95,000 units at $0.12 per unit, then the materials price variance is:
actual quantity used x (standard price- actual price)= materials price variance
95,000 x (0.15 - 0.12)= $2,850 favorable
the use of inexpensive, low quality materials often results in:
an unfavorable materials quantity variance
controlling the materials price variance is usually the responsibility of:
the purchasing agent
Operating Income/ Average total assets
Operating income/ sales
capital turnover (CT)
sales/ total investment
residual income= operating income - (minimum acceptable return x invested capital)
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