Exam 4: Accounting for Factory Overhead

The Lucas Manufacturing Company has two production departments (fabrication and assembly) and three service departments (general factory administration, factory maintenance, and factory cafeteria). A summary of costs and other data for each department, prior to allocation of service department costs for the year ended June 30, appears below. The costs of the general factory administration department, factory maintenance department, and factory cafeteria are allocated on the basis of direct labor hours, square footage occupied, and number of employees, respectively. Assuming that Lucas elects to distribute service department costs to production departments using the direct distribution method, the amount of factory maintenance department costs that would be allocated to the fabrication department would be (round all final calculations to the nearest dollar):

After the observations of cost and production data are plotted on graph paper, a line is drawn by visual inspection representing the trend shown by most of the data points using the:

The Owens Company uses the machine hour method of applying factory overhead to production. The budgeted factory overhead last year was $200,000, and there were 40,000 machine hours budgeted. Job 84 was started and completed during the period. Direct materials costing $900 were incurred. Twenty-five direct labor hours were worked at a cost of $350, and 40 machine hours were incurred. What was the cost of Job 84?

The Mason Corporation budgeted overhead at $240,000 for the period for Department A based on a budgeted volume of 60,000 direct labor hours. During the period, Mason started and completed Job B25, which incurred 200 labor hours at a cost of $2,200, and $5,000 of direct materials. What was the cost of Job B25?

The Owens Company uses the machine hour method of applying factory overhead to production. The budgeted factory overhead last year was $200,000, and there were 40,000 machine hours budgeted. Actual machine hours incurred during the period were 38,000, and actual factory overhead was $215,000. What was the amount of under- or overapplied factory overhead?

Nutt Industries electricity costs and machine hours over a six-month period follow: Using the high-low method, what is the estimated electricity cost per machine hour?

Cooper Company had overapplied factory overhead of $2,000 last year. Assuming the amount was considered small enough not to materially distort net income, the entries needed to close factory overhead are:

The Owens Company uses the direct labor hour method of applying factory overhead to production. The budgeted factory overhead last year was $200,000, and there were 40,000 machine hours and 50,000 direct labor hours budgeted. Job 84 was started and completed during the period. Direct materials costing $900 were incurred. Twenty-five direct labor hours were worked at a cost of $350, and 40 machine hours were incurred. What is the amount of factory overhead applied to Job 84?

Activity-based costing considers non-volume-related activities that create costs such as:

The most appropriate basis for allocating the factory building rent to specific departments would be the:

Victoria is a budget analyst at Young Industries. She used the least squares regression method to separate the plant's monthly utilities cost into its fixed and variable components. The results were as follows: Y = 3,250 + .054 X X = the number of units produced R² = .892 Based on these results, the December budget for plant utilities cost if Young Industries plans to produce 100,000 units in that month would be:

Victoria is a budget analyst at Young Industries. She used the least squares regression method to separate the plant's monthly utilities cost into its fixed and variable components. The results were as follows: Y = 3,250 + .054 X X = the number of units produced R² = .892 Which of the following statements is not true about Victoria's cost model?

The preferred sequence for distributing the cost of service departments to production departments when using the sequential distribution method is:

Santorini Ltd. has accumulated the following data over a six-month period: Determine the formula that could be used to determine Santorini's indirect labor cost at various levels of production using the high-low method.