Resolved Question 1: Overhead Application Working Backward

Resolved Question1 Overhead Application Working Backward The Towso

Resolved Question1 Overhead Application Working Backward The Towso

Resolve the following accounting problems related to overhead application, job order costing, cost behavior analysis using high-low method, break-even analysis, and costing methods. Address each problem with detailed calculations, explanations, and supporting formulas where necessary to demonstrate a comprehensive understanding of managerial accounting concepts and techniques.

Paper For Above instruction

Problem 1: Overhead Application - Working Backward

Towson Manufacturing Corporation applies overhead based on machine hours. The provided data indicates actual and estimated machine hours, overhead rates, actual overhead, and applied overhead for divisions A and B. The key unknowns for each division, such as actual machine hours, estimated overhead, and applied overhead, need to be determined.

Given Data:

  • Division A: Actual machine hours = 22,500; Overhead application rate = $4.50; Actual overhead = $110,000; Applied overhead = $86,000.
  • Division B: Estimated machine hours = ?; Overhead application rate = $5.00; Actual overhead = ?; Actual machine hours = ?; Estimated overhead = $90,000; Applied overhead = $86,000; Over- or under-applied overhead = $6,500.

Using this data, compute the unknowns for each division: actual machine hours, estimated machine hours, estimated overhead, and actual overhead.

Problem 2: Job Order Cost System Computations

General Corporation employs a job order costing system. Starting with balances from May 1, the task involves calculating total overhead applied, ending work-in-process inventory, costs of jobs completed, and cost of goods sold (COGS) for the fiscal year ending May 31.

Provided Data:

  • Work in process on May 1: $35,200; Finished goods: $86,900; COGS: $128,700.
  • Work in process includes jobs No. 101 ($20,400) and No. 103 ($14,800).
  • Direct materials requisitioned in May: $96,500; direct labor incurred: $114,500.
  • Job No. 101 and three other jobs sold during May at a profit of 20% of cost.
  • Cost details for other jobs: materials $21,000; labor $17,400.
  • Overhead applied daily at 150% of direct labor cost.
  • Calculate the total overhead applied in May.
  • Calculate the ending work in process inventory.
  • Calculate the costs of jobs completed during May.
  • Calculate the cost of goods sold for the year.

Problem 3: High-Low Method Analysis

Heritage Products has cost data for four quarters in 20X6. Using the high-low method, determine variable and fixed shipping costs and project total shipping costs for 20X7.

Data:

  • Shipping costs: Q1: $58,200; Q2: $58,620; Q3: $60,125; Q4: $59,400.
  • Orders shipped: corresponding quantities for each quarter, assumed to be provided.

Tasks:

  • Calculate variable cost per order shipped.
  • Calculate fixed shipping costs per quarter.
  • Estimate total shipping costs if activity reaches 570 orders in 20X7.

Problem 4: Break-Even and Cost-Volume-Profit Relationships

Cedars Hospital sells patient days at an average revenue of $180. Variable cost per patient day is $45, and fixed costs are $4,320,000 annually. Determine the break-even point in patient days, revenue needed for a target income of $540,000, and the impact of decreased variable costs on the fixed costs tolerable without changing the break-even point.

  • Patients needed to break even.
  • Required revenue for target profit.
  • Changes in variable costs and fixed costs tolerance.

Problem 5: Costing Methods and Income Statement Preparation

Consumer Products provides data for 20X6, including beginning and ending inventory, units manufactured and sold, costs per unit, and expenses. Use both direct costing and absorption costing to determine inventory, create income statements, and analyze profitability.

  • Compute ending inventory units.
  • Calculate unit cost under both costing methods.
  • Prepare income statements for each costing method.

References

  • Drury, C. (2013). Management and Cost Accounting. Springer.
  • Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
  • Horngren, C. T., Datar, S. M., & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis. Pearson.
  • Hilton, R. W., & Platt, D. E. (2012). Managerial Accounting: Creating Value in a Dynamic Business Environment. McGraw-Hill Education.
  • Kaplan, R. S., & Cooper, R. (1998). Cost & Effect: Using Information for Management. Harvard Business School Press.
  • Anthony, R. N., & Govindarajan, V. (2007). Management Control Systems. McGraw-Hill/Irwin.
  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial & Managerial Accounting. Wiley.
  • Blocher, E., Stout, D., Juras, P., & Cokins, G. (2019). Cost Management: A Strategic Emphasis. McGraw-Hill Education.
  • Higgins, R. C. (2012). Analysis for Financial Management. McGraw-Hill Education.
  • Shank, J. K., & Govindarajan, V. (1993). Strategic Cost Management. The Free Press.

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