Case I - Greeting Inc.: Job Order Costing

1- The total unit cost = Total Variable Cost + Production Fixed Expenses + Advertising Expense + Selling and Administrative Expense = 3.23 + 1.20 + 0.30 + 0.19 = 4.92.

11. Prepare a table that illustrates the percentage change in costs between the volume-based system and the strategic activity-based system.

11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?

Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

One of the major benefits of expansion is the reduction of fixed cost (fixed and selling). The cost is absorbed by 85,000 units instead of 80,000 units resulting in saving of $0.42 per unit.

“Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities

Wilkerson employs a Normal Cost System, which means that they use predetermined overhead rates along with actual costs for direct material and direct labor. Normal costing systems are appropriate when overhead costs are a relatively small percentage of total manufacturing costs and product diversity is limited. For Wilkerson, normal costing does not make sense. Overhead costs make up over 50 percent of total manufacturing costs and their product offering is relatively more diverse. This indicates that the current accounting system in place may be distorting costs significantly. Supporting data:

In the case of Mendel Paper Company which produces four basic paper products lines at one of its plants: computer paper, napkins, place mats, and poster board. Although the plant superintendent, Marlene Herbert is pleases with increased sales he is also concerned about the costs. The superintendent is concerned with the high fixed cost of production, the increases in fixed overhead and even variable overhead. He feels that the production of place mat should be discontinued. His reason for the discontinuation is that the special printing is driving up the variable overhead to the point where the company may not find it profitable to continue with the line. After reviewing the future predictions of the

uses budgeted fleet hours to allocate variable manufacturing overhead. The following information pertains to the company 's manufacturing overhead data:

There is a business I use to work for called Act 4 Photography; the business owner's name is Kim Roberts. Act 4 Photography would go to an event, set up back drops for people to pose in front of, take a variety of photographs upon request, bring the images up on a computer screen for approval, and offer 3 different sizes of good quality photo paper to print the images on. The good quality photo paper was stocked in 4x6 (small), 5x7 (medium) and 8x10 (large) size packages with 100 sheets in each package. He would bring one package of each to an average event and two packages of each to a large event. He would also bring the unused packages of each size used in prior events. The cost of goods sold is defined as "the total cost attributed to units

b. Use your answer to part A to determine the total annual indirect cost assigned to:

1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing

Therefore, there is no doubt that it is significant to allocate overhead cost accurately for every production. If the overhead is calculated incorrectly, the selling price of the product will change. The company will not cover the cost and make a loss.

MULTIPLE CHOICE QUESTIONS 1. Consider the following statements regarding traditional costing systems: I.Overhead costs are applied to products on the basis of volume-related measures. II.All manufacturing costs are easily traceable to the goods produced. III.Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements. Which of the above statements is (are) true? A. I only. B. II only. C. III only. D. I and III. E. II and III. Answer: D LO: 1 Type: N 2. Many traditional costing systems: A. trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates. B. write off

Manufacturing overhead is any manufacturing cost that is neither direct materials cost nor direct labour cost. Manufacturing overhead includes all charges that provide support to manufacturing.”