Question

1.Gwynnie Pie Company makes dessert pies for national fast food chains. Gwynnie Pie Company is considering using ABC costing and has the following activity cost pools and information​ available:

Activities	Estimated Overhead Costs	Estimated Activity
Material handling measured by batches	$251,000	2,000 batches batches
Mixing measured by batches	$116,000	2,320 batches
Packaging measured by units	$82,000	4,100,000 units
Maintenance measured by​ # of setups	​$15,000	260 setups

Gwynnie Pie Company currently uses a plantwide overhead rate based on total estimated machine hours of​ 100,000 hours. Based on their estimates for ABC​ costing, what would the allocated cost for all overhead costs for Job 607 be based on the following information about the​ job:

​# of units in the job​ = 4,600

​# of units in each batch​ = 920

​# of setups required to complete the job​ = 1   

​# of machine hours​ = 220

A.$969.50

B$1,020.80

C.$1,027.19

D$ 325.19

2. Flying High Manufacturing produces frisbees using a threeminus−step process that includes​ molding, coloring and finishing. Which account is credited when the frisbees are totally​ completed? A. Finished Goods Inventory B. WIP Inventorylong dash—Finishing C. Manufacturing Overhead D. WIP Inventorylong dash—Coloring

Answer 1

Solution :

Answer (1) The Answer is (C) $ 1,027.19.

Answer (2) The Answer is (B) WIP Inventory — Finishing.

Working :

(1)

No. of Bathes in Job 607 = Total Units / No. of Units per Batch

= 4,600 / 920

= 5 Batches

Overhead Cost Allocation to Job 607 as per ABC Costing

Activity	Working	OH Allocated
Material Handeling	($ 251,000 / 2,000) * 5	$ 627.5
Mixing	($ 116,000 / 2,320) * 5	$ 250
Packaging	($ 82,000 / 4,100,000) * 4,600	$ 92
Maintenance	($ 15,000 / 260) * 1	$ 57.69
Total		$ 1,027.19

(2)

At the time of transfer of finished goods from finishing department, following entry is to be passed :

Finished Goods	xxx
WIP Inventory - Finishing		xxx

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