Determine the two departmental cost driver rates- determine


1. The Gonzalez Company uses a job order costing system at its plant in Green Bay, Wisconsin. The plant has a machining department and a finishing department. The company uses two cost driver rates for allocating manufacturing overhead costs to job orders: one on the basis of machine hours for allocating machining department overhead costs and the other on the basis of direct labour cost for allocating the finishing department overhead costs. Estimates for the current year follow:


Machining Department

Finishing Department

Manufacturing overhead cost

$750,000

$450,000

Machine hours

25,000

2,000

Direct labour hours

5,000

30,000

Direct labour cost

$250,000

$600,000

a. Determine the two departmental cost driver rates

b. Last month, cost records for job 011 show the following:


Machining Department

Finishing Department

Direct materials cost

$15,000

$5,000

Machine hours

100

10

Direct labour hours

20

80

Direct labour cost

$1,000

$1,600

Determine the total costs charged to job 011.

2. The information below pertains to October production at Zippy Company's bottling plant, which produces and bottles sports drinks.


Units

Materials

Conversion

Work in process, October 1

2000

70% complete

60% complete

Started in October

10,000



To account for

12,000



Completed and transferred out

8,000

100% complete

100% complete

Work in process, October 30

4,000

40% complete

25% complete

Accounted for

12,000



Production Costs $8,250 $22,620

a. Determine the number of equivalent units of production for materials and conversion during October.

b. Determine the cost per equivalent unit for materials and conversion and the total cost per equivalent unit.

3. Lindon Company is the exclusive manufacturers of an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year.

a. What are the variable expenses per unit?

b. What is the breakeven point in units and sales dollars

c. What sales level in units and in sales dollars is required to earn an annual profit of $60,000?

d. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the company's new breakeven point in units and sales dollars?

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Financial Accounting: Determine the two departmental cost driver rates- determine
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