horngrenima15sm13.docVIP

CHAPTER 13 COVERAGE OF LEARNING OBJECTIVES LEARNING OBJECTIVE FUNDA- MENTAL ASSIGN-MENT MATERIAL CRITICAL THINKING EXERCISES AND EXERCISES PROBLEMS CASES, NIKE 10K, EXCEL, COLLAB. INTERNET EXERCISES LO1: Compute budgeted factory-overhead rates and apply factory overhead to production. A1,B2 33,34,38,39,40 50,51,52,53,60,63 69,75,76 LO2: Determine and use appropriate cost-allocation bases for overhead application to products and services. 32,40,41 50,51,52,53,60 69,76 LO3: Identify the meaning and purpose of normalized overhead rates. 42 63 LO4: Construct an income statement using the variable-costing approach. B4 43 55,56,57,58,59,64,65,72,73 70 LO5: Construct an income statement using the absorption-costing approach. A4,B4 43 55,56,57,58,59,64,65, 72,73 70 LO6: Compute the production-volume variance and show how it should appear in the income statement. 37,46,47,48,49 60,61,62,67,68,72,73 71 LO7: Explain why a company might prefer to use a variable-costing approach. 55,56,61,64 70 CHAPTER 13 Accounting for Overhead Costs 13-A1 (15-20 min.) This is a solid basic problem concerning overhead application. 1. Overhead rate = Budgeted overhead ÷ Appropriate cost driver Department A = $1,820,000 ÷ 350,000 = $5.20 per machine hour Department B = $1,000,000 ÷ 125,000 = $8.00 per direct-labor hour 2. Department A = $5.20 x 3,500 $18,200 Department B = $8.00 x 1,250 10,000 Total applied overhead $28,200 3. Dept. A Dept. B Total Direct material $12,000 $32,000 $44,000 Direct labor 10,800 10,000 20,800 Applied factory overhead 18,200 10,000 28,200 Totals $41,000 $52,000 $93,000 Unit cost, $93,000 ÷ 120 $ 775.00 4. Students must be on guard to get their definitions clear. Overapplied essentially means that actual overhead is less than that absorbed by (applied to) the products worked on during the period. Computations follow: Factory as Dept. A Dept. B a Whole Actual $1,300,000