Dolly's Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added at the end of the process to create the various models that are sold. The basic design and floor plans of all the houses are identical, however. During the most recent month, the lumber used in trimming the houses was inadvertently recorded as direct materials. At month end, when the error was discovered, Susie Rief, the accountant, was told by the accounting manager, Karen Tate, not to bother with correcting the error, because the dollar amount of the error was not "worth it." Susie believes that the dollar amount is not as important as the quality of the reports. She wonders whether she would be committing an unethical act if she were to make the changes anyway, despite her superior's telling her not to. Required:

Dolly's Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added at the end of the process to create the various models that are sold. The basic design and floor plans of all the houses are identical, however. During the most recent month, the lumber used in trimming the houses was inadvertently recorded as direct materials. At month end, when the error was discovered, Susie Rief, the accountant, was told by the accounting manager, Karen Tate, not to bother with correcting the error, because the dollar amount of the error was not "worth it." Susie believes that the dollar amount is not as important as the quality of the reports. She wonders whether she would be committing an unethical act if she were to make the changes anyway, despite her superior's telling her not to. Required:

Name: PROCESS COSTINGDolly's Dream Homes, Inc. manufactures doll houses in
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Description: PROCESS COSTINGDolly's Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added atthe end of the process to create the various models that are sold. The basic design and floor plans o

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter10: Standard Costing And Variance Analysis

Section: Chapter Questions

Problem 69P: Phono Company manufactures a plastic toy cell phone. The following standards have been established...

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Saratoga Systems produces a single product. The production process requires all material to be brought to the shop floor before any work begins. The material is then processed and assembled and then transferred to finished goods inventory. Every unit is completely identical in specification and use, and no customization is possible. Because of the cost of the product, only a few units are produced in any one month. During June, only three units were started, and these were labelled ID061, ID062, and ID063. There was no beginning inventory of any kind on June 1. Records from the raw material store and employee time records show the following requisitions and direct labor costs: Direct Material Direct Labor ID061 $ 17,000 $ 17,600 ID062 15,300 14,600 ID063 18,700 3,800 The difference in the material cost represents the historical cost of material purchased at different times. The difference in labor cost represents the difference in seniority (not skill) of the individual…
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products based on machine-hours. The predetermined overhead rate was based on a cost formula that estimates $900,000 of total manufacturing overhead for an estimated activity level of 75,000 machine-hours. During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provided the following data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end: 60,000 $ 850,000 Raw materials Work in process (includes overhead applied of $36,000) Finished goods (includes overhead applied of $180,000) Cost of goods sold (includes overhead applied of $504,000) Required: 1. Compute the underapplied or overapplied overhead. 2. Assume the company closes underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry. 3.…
Tim's Toys makes custom silver picture frames embroidered with names and significant dates, such as weddings or births. Although the frames can be partially completed in advance, all frames remain in the Work in Process Inventory account until the final engraving is completed. Frame AAA01 was completed in January. At the beginning of January, costs accumulated on the frame were direct materials of $40, direct labor of $60, and overhead of $15. Completing the frame required 1.5 hours of direct labor at $15 per hour. Overhead is applied at $4 per direct labor hour. What is the total cost on the job cost sheet for Job AAA01 at the end of January? 4 O $103.50 O $122.50 O $61.50 O $143.50
Phono Company manufactures a plastic toy cell phone. The following standards have been established for the toys materials and labor inputs: During the first week of July, the company had the following results: The purchasing agent located a new source of slightly higher-quality plastic, and this material was used during the first week in July. Also, a new manufacturing layout was implemented on a trial basis. The new layout required a slightly higher level of skilled labor. The higher-quality material has no effect on labor utilization. Similarly, the new manufacturing approach has no effect on material usage. (Note: Round all variances to the nearest dollar.) Required: 1. CONCEPTUAL CONNECTION Compute the materials price and usage variances. Assuming that the materials variances are essentially attributable to the higher quality of materials, would you recommend that the purchasing agent continue to buy this quality, or should the usual quality be purchased? Assume that the quality of the end product is not affected significantly. 2. CONCEPTUAL CONNECTION Compute the labor rate and efficiency variances. Assuming that the labor variances are attributable to the new manufacturing layout, should it be continued or discontinued? Explain. 3. CONCEPTUAL CONNECTION Refer to Requirement 2. Suppose that the industrial engineer argued that the new layout should not be evaluated after only one week. His reasoning was that it would take at least a week for the workers to become efficient with the new approach. Suppose that the production is the same the second week and that the actual labor hours were 13,200 and the labor cost was 132,000. Should the new layout be adopted? Assume the variances are attributable to the new layout. If so, what would be the projected annual savings?
Display Design Incorporated (DDI) is a new company that creates display cases for various types of collectibles. DDI has hired you as an accountant to help measure and evaluate costs. Your first day on the job, they provide you with the following interactive dashboard concerning the prior month's costs.
Luzadis Company makes furniture using the latest automated technology. The company uses a job - order costing system and applies manufacturing overhead cost to products based on machine - hours. The predetermined overhead rate was based on a cost formula that estimates $1, 520,000 of total manufacturing overhead for an estimated activity level of 76, 000 machine - hours. During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provided the following data for the year: Machine - hours 64, 000 Manufacturing overhead cost $ 1, 471,000 Inventories at year - end: Raw materials S 14,000 Work in process (includes overhead applied of $64, 000) $ 90,500 Finished goods (includes overhead applied of $204, 800) S 289,600 Cost of goods sold (includes overhead applied of $1, 011, 200) $ 1,429, 900 Required: Compute the underapplied or overapplied overhead. Assume the company closes underapplied or overapplied overhead to Cost of…
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,066,000 of total manufacturing overhead for an estimated activity level of 82,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: Machine-hours 68,000 Manufacturing overhead cost $ 1,029,000 Inventories at year-end: Raw materials $ 17,000 Work in process (includes overhead applied of $88,400) $ 192,000 Finished goods (includes overhead applied of $132,600) $ 288,000 Cost of goods sold (includes overhead applied of $663,000) $ 1,440,000 Required: 1. Compute the underapplied or…
Gilbert Inc. manufactures custom conveyor systems for manufacturing and commercial operations. Erin Smith is Gilbert's management accountant and she is in the process of training a new employee, Heather Fontenot, on the order costing system by Gilbert Inc. uses. The costing system is based on normal costs; overhead costs are allocated based on the cost of direct labor. Heather has collected the following order cost records for July: FIF: indirect manufacturing costs To explain the missing order number, Erin informed Heather that job # 668 had been completed and delivered in June. She also told him that Order No. 667 was the only order in progress at the beginning of July. At that time, $ 4,300 had been allocated as the cost of raw materials and $ 900 as the cost of direct labor. At the end of July, order N. 671 was not completed; all others had been completed. Among the completed orders, orders N. 667, 669 and 672 were delivered in July. Heather also obtains a total amount of $…
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,207,000 of total manufacturing overhead for an estimated activity level of 71,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year. Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $46,750) Finished goods (includes overhead applied of $187,000) Cost of goods sold (includes overhead applied of $701,250) Required: 1. Compute the underapplied or overapplied overhead. 2. Assume that the company closes any underapplied or overapplied…
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products based on machine-hours. The predetermined overhead rate was based on a cost formula that estimates $765,000 of total manufacturing overhead for an estimated activity level of 85,000 machine-hours. During the year, a large quantity of furniture on the market caused Luzadis to cut production and build inventories. The company provided the following data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $62,100) Finished goods (includes overhead applied of $105,570) Cost of goods sold (includes overhead applied of $453,330) Required: 1. Compute the underapplied or overapplied overhead. 69,000 $ 719,000 $ 14,000 $ 183,000 $ 311,100 $ 1,335,900 2. Assume the company closes underapplied or overapplied overhead to Cost of Goods Sold.…
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,368,000 of total manufacturing overhead for an estimated activity level of 72,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: Machine-hours 61,000 Manufacturing overhead cost $ 1,324,000 Inventories at year-end: Raw materials $ 16,000 Work in process (includes overhead applied of $115,900) $ 188,000 Finished goods (includes overhead applied of $208,620) $ 338,400 Cost of goods sold (includes overhead applied of $834,480) $ 1,353,600 Required: 1. Compute the underapplied or…
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $44,400) Finished goods (includes overhead applied of $150,960) Cost of goods sold (includes overhead applied of $692,640) Required: 1. Compute the predetermined overhead rate used by the company during the year. 2. Is Manufacturing Overhead…