ACC 206 Week Three Assignment Please Complete The Following

Acc 206 Week Three Assignmentplease Complete The Following Five Exerci

Calculate the unknowns for each division based on overhead application rates, actual overhead, estimated overhead, and over- or under-applied overhead. Use the provided divisional data, including machine hours, overhead rates, and overhead amounts, to determine missing values with appropriate calculations.

Compute the total overhead applied to production during May, the cost of ending work in process inventory, the cost of jobs completed during May, and the cost of goods sold for the year ended May 31, using the job order cost system information, including direct materials, direct labor, and overhead application rate.

Using the high-low method, determine the variable shipping cost per order, the fixed shipping costs per quarter, and project total shipping costs for 20X7 given an activity level of 570 orders.

Calculate the break-even point in patient days for Cedars Hospital given revenue, variable costs, and fixed costs; determine the revenue needed to reach a target income of $540,000; assess the impact of reduced variable costs on the fixed costs that can be tolerated without changing the break-even point.

Using the provided manufacturing and cost data for Consumer Products, compute the ending inventory units, the unit cost under both direct and absorption costing, and prepare income statements for the year ended December 31, 20X6, using both costing methods.

Paper For Above instruction

Introduction

Cost accounting provides essential information for managerial decision-making, involving various techniques such as overhead application, job order costing, high-low method, and cost-volume-profit analysis. This paper systematically addresses five key exercises that exemplify these techniques, demonstrating their application to real-world scenarios in manufacturing, healthcare, and distribution sectors.

Divisional Overhead Application and Absorption

In the first exercise, we analyze divisional overhead data for Towson Manufacturing Corporation, which applies overhead based on machine hours. The task involves calculating missing figures like actual machine hours, estimated overhead, applied overhead, and over- or under-applied overhead for each division, utilizing the provided overhead rates and actual/estimated data.

Divisional data indicates that Division A has actual machine hours of 22,500 and applied overhead of $86,000, with an overhead rate of $4.50 per machine hour. The actual overhead is given as $110,000, and estimated overhead is not specified but can be derived. Division B's actual machine hours are unknown, with an estimated machine hours possibly inferred from other data, and the overhead rate is $5.00 per machine hour with actual overhead of an unspecified amount. Using the formulas:

Applied Overhead = Overhead Rate × Actual Machine Hours

Over- or under-applied overhead = Actual Overhead - Applied Overhead

We can solve for the missing variables, ensuring consistency across divisional data, and thus derive the actual machine hours for Division B as well as estimated overheads.

Job Order Cost System Applications

The second exercise involves comprehensive job costing for General Corporation. Beginning with ledger balances, direct materials requisitioned, direct labor incurred, and overhead applied at 150% of direct labor cost, the analysis encompasses calculating overhead applied during May, the cost of ending work in process, the cost of jobs completed, and cost of goods sold.

Therefore, the total overhead applied equals:

Overhead applied = 150% of Direct Labor Costs

Given direct labor costs of $114,500, overhead applied amounts to:

Overhead Applied = 1.5 × $114,500 = $171,750

Remaining calculations involve summing direct material and labor costs, adding overhead to determine total job costs, and allocating costs to specific jobs, including ending inventory and completed jobs, based on the data provided.

High-Low Method Analysis

The third exercise employs the high-low method to analyze shipping costs relative to the number of orders shipped. Using the data of quarter-wise shipping costs and orders shipped, the goal is to determine variable cost per order and fixed costs per quarter.

Expressed as:

Variable Cost per Order = (High Cost - Low Cost) / (High Orders - Low Orders)

Fixed Costs per quarter = Total Cost - (Variable Cost per Order × Orders Shipped)

Then, projecting the total costs for 20X7 with 570 orders involves calculating:

Total Shipping Cost = Fixed Cost + (Variable Cost per Order × 570)

Cost-Volume-Profit Analysis and Break-even

The fourth exercise addresses the hospital’s breakeven analysis. With average revenue per patient day, variable costs, and fixed costs provided, the calculation of breakeven patient days is straightforward:

Break-even patient days = Fixed Costs / (Revenue per patient day - Variable cost per patient day)

Target income revenue = (Fixed Costs + Target Profit) / Contribution margin per patient day

If the variable cost per patient day drops, the model allows calculation of the increased fixed costs that can be tolerated without changing the original breakeven point by analyzing the contribution margin per patient day.

Costing Methods and Income Statement Preparation

The final exercise involves calculating ending inventory units, unit costs, and preparing income statements using both direct and absorption costing. The calculations include:

• Ending inventory units: units manufactured minus units sold
• Unit costs under direct costing: sum of direct materials, direct labor, variable manufacturing overhead, divided by units produced
• Unit costs under absorption costing: includes fixed overhead allocated per unit

Income statements are then prepared by subtracting costs from revenues, clearly distinguishing between variable and fixed expenses, to analyze how different costing methods impact reported profitability.

Conclusion

The exercises outlined provide a comprehensive overview of managerial accounting applications, including overhead analysis, job costing, cost behavior analysis, and financial statement preparation. Mastery of these techniques enhances managerial decision-making by providing accurate and relevant cost information in diverse organizational contexts.

References

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