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Chapter 19: Q3RQ (page 1063)

Question: Describe how a single plantwide overhead allocation rate is used.

Short Answer

Expert verified

Answer

Prior to the start of the period, the corporation chooses one allocation basis and uses it to compute the specified overhead allocation rate.

Step by step solution

01

Meaning of Plantwide overhead rate

Plant overhead distribution is calculated using volume-based pointers such as coordinate work or machine hours. The strategy works well for small businesses that have predictable costs.

02

Uses of single plantwide overhead allocation rate.

The conventional and most straightforward way to designate overhead costs is to employ a single plantwide rate. The corporation decides the planned overhead allotment rate before the period even starts by choosing one allotment base and apportioning overhead to each unit using that base.

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Most popular questions from this chapter

Clancy’s Carpet Cleaning Services uses ABC to allocate overhead costs and has computed the following predetermined overhead allocation rates:

Activity Allocation Base Allocation Rate

Supplies Number of square feet \( 0.05 per square foot

Travel Number of customer sites \) 20.00 per site

Clancy cleans the carpets for an apartment management firm. When a renter moves out, the apartment management firm contacts Clancy to clean the carpets in preparation for a new tenant. During the past month, Clancy cleaned the carpets of 23 apartments with 1,200 square feet each. What amount of indirect costs should Clancy allocate to the apartment firm for the month?

Question:Low Range produces fleece jackets. The company uses JIT costing for its JIT production system.

Low Range has two inventory accounts: Raw and In-Process Inventory and

Finished Goods Inventory. On March 1, 2018, the account balances were Raw and In-Process Inventory, \(9,000; Finished Goods Inventory, \)1,700.

The standard cost of a jacket is \(40, composed of \)12 direct materials plus \(28 conversion costs. Data for March’s activities follow:

Number of jackets completed 15,000

Number of jackets sold (on account, for \)50 each) 14,600

Direct materials purchased (on account) \( 177,500

Conversion costs incurred \) 521,000

Requirements

2. Prepare summary journal entries for March. Underallocated or overallocated conversion costs are adjusted to Cost of Goods Sold monthly.

Question:Refer to Exercise E19-26. Western desires a 20% target net profit after covering all costs. Considering the total costs assigned to the Halbert engagement in Exercise E19-26, what would Western have to charge the customer to achieve that net profit? Roundto two decimal places.

What are the inventory accounts used in JIT costing?

Define value engineering. How is it used to control costs?
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