Question

# The following information is available pertaining to the Production Division of Clarkson Enterprises: Assembly Dept.      ...

The following information is available pertaining to the Production Division of Clarkson Enterprises:

Assembly Dept.       Finishing Dept.        Total

Overhead costs                 \$10,000        \$30,000               \$40,000

Direct labor hours 8,000           2,000                    10,000

Machine hours                 3,000           5,000                      8,000

Production information pertaining to Job 4X5:

Assembly Dept.       Finishing Dept.        Total

Prime costs           \$2,380                    \$-0-                        \$2,380

Direct labor hours    280                         -0-                          280

Machine hours        -0-                           -0-                           -0-

Units produced       500                         -0-                           500

1. Refer to Figure 5-7. What is the plantwide overhead rate based on direct labor hours?

a. \$1.00

b. \$1.50

c. \$3.00

d. \$4.00

2. Refer to Figure 5-7. Using the plantwide overhead rate based on direct labor hours what is the cost of Job 4X5?

a. \$1,250

b. \$2,000

c. \$8,750

d. \$3,500

3. Refer to Figure 5-7. What is the overhead rate for the Finishing Department based on machine hours?

a. \$6.00

b. \$4.00

c. \$2.25

d. \$1.50

4. Refer to Figure 5-7. What are the total overhead costs assigned to Job 4X5, assuming the Assembly and Finishing Departments use direct labor hours and machine hours for their bases, respectively?

a. \$62.50

b. \$250.00

c. \$350.00

d. \$2,380.00

Figure 5-4

Lanyard Company uses a job-order costing system to account for product costs. The following information pertains to 2014:

Materials placed into production           \$170,000

Indirect labor                                                              40,000

Direct labor (10,000 hours)                               160,000

Depreciation of factory building              60,000

Other factory overhead                                    100,000

Increase in work-in-process inventory     20,000

Factory overhead rate is \$20 per direct labor hour.

5. Refer to Figure 5-4. What is the total amount credited to Materials Inventory for Lanyard in 2014?

a. \$480,000

b. \$170,000

c. \$140,000

d. \$110,000

6. Refer to Figure 5-4. What is the total amount debited to Finished Goods Inventory in 2011?

a. \$490,000

b. \$510,000

c. \$450,000

d. \$550,000

#### Homework Answers

Answer #1
 Q1. Answer is d. \$4 Explanation: Estimated overheads 40000 Divide: Labour hours 10000 OH rate per DLH 4 Q2. Answer is d. \$ 3500 Explanation: Cost of Job 4X5 Prime Cost 2380 Oh (280 hrs @4) 1120 Total cost 3500 Q3. Answer is a. \$ 6.00 Explanation: Estimated OH of finished deptt 30000 Divide: machine hours 5000 OH rate per MH 6 Q4. Answer is c. \$ 350 Explanation: Assembly Oh (280*1.25 per DLH) 350 Finishing 0 Total OH cost of Job 4X5 350
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